Preparing for the Fiscal Cliff

Here is an excellent article about how to plan for the "fiscal cliff."

Anything Taxes  November  2012 Chris Micklatcher, P.C.   835 Golden Avenue Battle Creek, Michigan 49014  www.talktoataxman.com     Specializing in Resolving Tax Controversies   - IRS Tax Problems   - Michigan Tax Problems   - Business Taxes   - Individual Taxes   - Tax Audits   - Tax Collections    - Unfiled Tax Returns   - Tax Liens & Levies   - IRS Notices

Have you ever put a lot of money into fixing a problem, like buying a used car to replace the old one, only to find out the "new" used car has the same problems (or worse) as the old one?  It's frustrating.  All that time and money, and nothing has changed.  Well, that is how I feel about the elections.  It's not the results of the elections that bother me, but rather the fact we have a long-standing fiscal crisis in the country and the leaders of both political parties are kicking the can down the road.   

 

We did not hear much about the "fiscal cliff" before the elections but now its exploding on the airwaves.  Do I fault the politicians or the media?  Does it matter?  All I know is that the political leaders have failed me, and it's time to take matters into my own hands.

 

So, how are our political leaders responding to the "new" fiscal crisis?  Both sides have called for bi-partisanship, but I just don't believe it based on past behavior.  The day after the election the political bickering started, and lines are already drawn in the sand. http://www.politico.com/news/stories/1112/83514.html

 

I heard a joke recently where the Democratic leadership is heading towards the fiscal cliff at 100 miles per hour, but the Republican leadership is heading there at 50 miles per hour.  In either case we are still going over.  So, it seems like the average taxpayer just cannot win.   

 

It's time for all of us to educate ourselves and act!  Here are a few things to keep in mind as you consider the next four years.

 

First, there is an immediate problem facing you.  The politicians must deal with the pending tax increases and spending cuts due to be implemented in early January 2013.  If not, the US economy could be sent into a tailspin. What's this mean to you?  Well, it means heading into a recession and higher taxes.  But, the politicians know how to kick the can down the road...giving us a "new" used car.  The politicians will probably raise the national debt again, and print more money.  This short term fix will result in even a bigger US debt that we will have to deal with in a few years. http://www.foxnews.com/politics/2012/11/09/budget-office-fiscal-cliff-cuts-tax-hikes-would-lead-to-recession/

 

Second, there is a long term problem facing you.  The huge US debt will not be fixed anytime soon and every family needs to prepare for the looming "winter" season the US economy will go through.  Right now, every child eighteen years old and younger owes $218,000 to the US Treasury.  That's a huge burden to put on the next generation to finance our generation's wants.  Without dealing with it, expect higher prices and inflation for years to come until we eventually fall off the cliff.  How do you do prepare?  You need to watch your pocketbook, and evaluate your household budget.  You need to control your money rather than it controlling you.  A good place to start is www.mint.com orwww.daveramsey.com  Both of these websites offer budgeting tools.

 

Third, there are opportunities.  If you have extra cash and are looking for investment opportunities check out this article for sectors to invest in.  There will be winners...always are. http://www.foxbusiness.com/investing/2012/11/06/americalets-not-wreck-it/

 

Don't play the blame game...except for maybe politicians and used car salesmen.  Just prepare and you'll be fine.    

 

Chris