What a way to welcome the year: the market is down, a recession appears to be imminent (if not here already) and worst of all, I still can’t find myself a Nintendo Wii.

As we enter the New Year, things may look a bit bleak, but a few resolutions I plan on keeping will help ensure my year is a success.

What about you? What have you resolved yourself to do? If you’re still looking for a few ideas, here’s a couple of scattered things to help get you on your way:

Reduce Those Taxes. Investing in managed mutual funds? Chances are you’re paying more tax than you should.

While I’m all for paying my share of tax, I prefer not paying more than my share, and that’s why I like to minimize the tax I pay by investing in index funds. Are you investing in managed mutual funds? If you are, there’s a decent chance your fund managers are actively trading stocks and as a result, they could be causing you all sorts of unnecessary tax.

Do you have an idea whether or not your funds are causing you excess taxes? Take a moment to do something really boring but effective: take out last year’s tax return, look on the first page, line item 8a and 9a under “Taxable Interest” and “Taxable Dividends.” If there are dollar amounts on these line items, and you aren’t using this money for income, then you are paying more tax than you should.

If this is the case, don’t take your portfolio to Jiffy Lube for a tune up, rather, take it to a knowledgeable investment or tax advisor. They should be able to give you a few ideas on how to save you some taxes such as investing in index funds or other options not mentioned here.

Rebalance Your Investments. Statistics don’t lie. When it comes to mutual funds, they tell us that last year’s winners are often next year’s losers. Did you make some nice gains last year in things such as international and emerging market stock funds? Congratulations. That’s great news. But just like a good roll at the dice table, it could be time to take some money off the table and put it into your pocket or somewhere else.

Save a Couple of Bucks. Invest a hundred dollars a month into an S&P 500 index fund and ten years later what do you get? At a hypothetical return of 8% per year, here’s what you get: very little taxes to pay along the way, diversification into the 500 largest companies in the country across several different industries, low fees and at the end of the day, around $17,000 dollars towards your retirement. … How good is that?

Review Your Risk. The markets are pretty bumpy these days (to say the least), and the experts out there are fighting each other as to whether we’ll spend the year running with the bulls or getting eaten alive by hungry bears. Are you invested heavily in stocks? Maybe it’s time to take a breather. After all, for a portion(s)of your money, a 5% rate of return in something such as a boring CD could be much more appealing at the end of the year than losing some money in the stock market.

Make That Contribution. Grandma sport you a few extra C-notes for Christmas? Consider using that money for a nice gift: tuck some of that money into an IRA by April 15^th, get a nice tax deduction and watch it (hopefully) grow tax deferred. By the time retirement rolls around, chances are pretty decent that you’ll be able to get yourself not one nice Christmas gift but more than a few.

 

Pay Off That Debt. Before making that IRA contribution or investing a few dollars, this one should be at the top of the list… Want to lock-in an attractive rate of return?

Many people can do so by paying down their credit card debt. Some cards I’ve seen charge an astronomical interest rate and by paying it down, congratulations – you just “banked” yourself this high rate of “return.”

Explore. I just recently evaluated a software program that could potentially revolutionize the way people pay off their mortgages. Although I haven’t completed my total due diligence yet, it appears this system could help you pay off your mortgage in about half the time. And get this…. paying off the mortgage in less time does not appear to require any additional out-of-pocket payments. … Fascinating? … Absolutely. … Accurate? …. It appears that way. … Care to know how to do this? … Give me some more time to complete my due diligence.

Write Something. Have a great idea? Why not share it with me and many others?… My new book came out in November and I can honestly say, it’s changed my life. Although I’ve written quite a few things before, this was my first major release and it’s done wonders for me on many different levels. Regardless of the profession you’re in — whether you are a plumber, painter, full time mom, or even out of work — writing about something you’re familiar with helps you stand out amongst the crowd.

If there’s any advice I’d give anyone about creating a much welcomed milestone in their life, it would be to write a book, or even simpler, a blog, a newspaper article, … anything at all. Chances are, there’s an audience out there for your thoughts and with a little time and dedication, there’s little doubt your work will find its audience.

Read. Care to tune up your investments? Learn a few things? There’s no better place to start than by reading a good book. Here’s couple of my personal favorites that come to mind:

• You Can Never Be Too Rich (how can I resist recommending my own book?)
• The Millionaire Next Door (fantastic read)
• The Intelligent Investor (the all-time classic book on value investing)
• You’ve Lost It, Now What? How to Beat the Bear Market and Still Retire on Time (practical advice from the Wall Street Journal columnist you shouldn’t miss)
• The Little Book That Beat The Market (a great read for a technical investor)
• The Automatic Millionaire (very simple, but very effective)
• Exchange-Traded Funds For Dummies (never heard about these ETFs? Start reading about them now!)
• Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor (Classic book on understanding mutual funds)
• Blood on the Street (Where did your money go in the tech crash of 2001? Here’s a great inside view on Wall Street you won’t want to miss)
• You Buy, You Die, It Pays (Life Insurance? Check out this book for some truly creative ideas)
• The Science of Getting Rich (Ever hear of Napolean Hill’s classic “Think and Grow Rich?” If you haven’t, then you probably heard of people such as Anthony Robbins and a long list of other personal-power gurus that can all trace their roots back to Wallace Wattle’s classic book that serves as a foundation to all)

Send Cards. I don’t know about you, but it’s pretty rare when I get a card from someone these days. While my email in-box is constantly stuffed, last year, a buddy of mine did something from way back in the stone age: he sent me a “thank you” card. In our age of technology, that thing really stood out; so much so, that the other day I purchased a box of thank you notes and vowed to use at least one every month.

In Conclusion. Did I miss any good ideas? … I’m certain I did. … Drop me a line. … I’d love to hear some good ones. After all, good market or bad market - there’s nothing like a good resolution kept to ensure your year is a success.

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So there we were, a bunch of guys in their 40s on a Tuesday night, sitting around a corporate conference room table playing our once-a-month friendly game of Texas Hold ‘em.

On the big screen, the Sox were busy beating the Indians, the credenza was overflowing with pizza, Doritos and drinks, Attorney Steve was busy talking about landing a big one for his firm, CPA Rob was talking about his daughter’s birthday and somewhere at the far end of the table I could hear ultra-successful investment banker Brad mumbling about his wife demanding a pit-stop at Publix for a frozen chicken.

And there, sitting at the head of table was myself, concentrating on one thing and one thing only: staring down film producer Rod, wondering if he was trying to bluff me out of yet another hand. Believing a third rub of his eye was his tell, I called his “all-in” and heroically managed to beat his two-pair with a straight to the ten.

Although losing the biggest hand of the night wasn’t destined to be his fondest memory, I did manage to give him the bright side of things: technically speaking, the money he just lost could potentially be a tax write-off for him.

Surprising? To many people, it most certainly is. In fact, I find many people aren’t aware of the laws regarding the thing we all look forward to, sometimes referred to as “winning free stuff.”

So, while you may not find yourself hanging out with the Hold ‘Em gang on a Tuesday night, who knows? You may find yourself the proud owner of something for free. And in the event you do land such a thing, when it comes to taxes and other related issues, here’s a few quick things to keep in mind…

Given there’s a better chance for me to win PowerBall than for my New York Jets to win another Super Bowl, I suppose I should remind myself of what will happen if I got so lucky to win the biggest lottery in the land.

Generally, all lottery winnings are subject to federal, state and local taxes. An award under $600 dollars is often not reported, however, technically speaking, any amount you win needs to be reported as taxable income. Large winnings are reported on IRS form 5754 and other than swimming to Cuba with cash stuffed up your pants, there’s no way to avoid taxes when winning the big one.

Disappointed? Don’t be. For those that don’t appreciate lengthy swims to foreign lands, you may want to consider not playing the big one at all. …. Why? … Well, consider this: PowerBall is played twice a week and the odds of winning are roughly 120,000,000 to 1 (which is close to the odds of my Jets winning another Super Bowl). Do the math, and it doesn’t take a rocket scientist to know you have a longshot to win it (for those that caught my prior statistics error, I thank you for the heads up).

That’s not very good odds, and yet another reason why you might want to consider sticking with that nice morning run around the neighborhood instead of training for a swim to Cuba.

Have you ever won a cash prize? I once did. High school, 7-11, a scratch-off-something where I think I won somewhere around $20 dollars (and no, I don’t believe I reported that to the IRS).

When it comes to winning a cash prize, this one is fairly simple: cash prizes are taxable, and as a result, federal, state and local taxes are owed on the amount you win. Typically, anywhere from 10% to 25% of the winnings could be withheld from large amounts awarded. As for the rest, you’ll have to pay the rest come tax time.

Forget Tiger Woods. A few years back, a buddy of mine once landed a very sweet hole-in-one at a charity golf tournament. Not only did he get a peck on the check from the snack girl, but he also won a brand new Porsche.

Sound good? It sure did, until he learned Uncle Sam wanted to ride shotgun. When it comes to winning product prizes, the IRS says you’ll have to pay federal, state and local tax on fair market value, rendering the peck on the cheek from the pretty snack girl the only thing you may want to actually take home with you.

Who wouldn’t want to win money at a casino? I certainly would, and if anyone out there has had the experience of doing such a thing, toss me a note about how it feels.

When it comes to winning big money, casinos typically withhold 30-40% of the winnings. Ironically, however, the tax laws are actually different depending on the game you played to win it.

See, the casinos managed to convince congress there’s no way they can possibly keep track of everyone, especially at the lower wage tables when playing blackjack, baccarat, craps, roulette or the big wheel. As a result, generally speaking, when playing at those tables, the winnings are generally not reported to the IRS – but technically speaking, the gambler is always supposed to report any winnings as money received.

And as for comps, get this: technically speaking, those things you get for free could be deemed taxable items as well. Needless to say, I don’t know of many people that report a comped surf and turf down at the Bellagio on their tax return, but once again, technically speaking, all that free stuff could be something to report as well.

Other tidbits that come to mind include:

• Bells ringing all over creation? Congratulations on your win, but winning money at slots will be reported if the amount is over $1200.

• Pick a few winners on Keno? Well done. But any amount above $1200 will be reported as well.

• Chicago Buck or Eddie’s Revenge come in first? That’s real sweet and it may even get you a date with the best looking girl on the block, but remember: winnings down at the horse or dog track over $5,000 or 300x the wager will be reported.

• If you’re like me and typically lose more than you win, here’s an important point: generally, one can write off gambling losses against their income, but only up to the amount of their winnings.

• Excess losses cannot be carried forward to the following tax year.

• Gambling at an Indian Reservation? Have fun, bring a date, win huge, quit your job, enjoy the Elvis impersonator but remember, all the rules above still apply.

• To substantiate wins and losses, the IRS requires a journal of record that states a list of items including, (1) the date and type of your wagers; (2) the name of the gaming establishment; (3) the address or location of the gaming establishment; (4) the names of the other person(s), if any, present with you; (5) the amount(s) you won or lost; and lastly, (6), whether or not you were drinking, and if you were, the type of drink you had (just kidding).

Get a Wii for your birthday? That’s great, especially since I’ll be glad to come by and challenge you to a set of tennis. But what if it was a really nice gift? The type of gift I’m talking about is the one over $12,000. Get one of those sweet somethings and technically speaking, the person who made the gift is required to pay the tax on its fair market value (note: $12,000 is for tax year 2007 only; the amount typically changes every year).

So, the next time someone wants to buy you the New England Patriots, be sure not to tell them they’ll have to pay the tax, otherwise, you’ll likely end up with the NY Jets instead.

As far as I’m concerned, ending up with the Jets and someone having to pay the tax is lame, but it is the law. But don’t despair, there are exceptions to the rule. Gifts that are generally not taxable include tuition and medical expenses paid by someone else, gifts to your spouse, gifts to a political organization and gifts to charities.

Uncle Moe was a great guy. Not only did he buy your first Nirvana album, but he also left you a few million bucks to boot. Not bad. But while a few mill is all well and good, don’t think for a moment that the other Uncle of ours doesn’t want his cut as well.

Sad, but undeniably true, even that occasionally annoying thing called “Death” can be taxed. Specifically, the type of tax I’m referring to is often called “the death tax,” or, technically speaking, the “estate tax.”

If there’s any good news about the estate tax, it’s that few families actually incur it. Statistically, only a small percentage of people will have to deal with this, but in tax year 2007, if Uncle Moe died with over $2 million, you’ll likely have to pay estate tax on the amount inherited above that “exempted” amount.

Going into details about the estate tax is far beyond the focus of this post, but it is an important point, and if it hasn’t been addressed within your family, trust me: it’s something you should most definitely look into the different ways one can potentially reduce it.

I love winning free things. After all, who doesn’t? But whether it’s landing snake eyes, a hole-in-one or someone off-loading the New York Jets, next time Lady Luck rears her beautiful head, keeping in mind the things above could be some important points to remember.

Order my brand new book today and save 5% from Amazon: You Can Never Be Too Rich: Essential Investing Advice You Cannot Afford to Overlook

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Here’s a trivia question: when is the one time someone giving you money is a terrible thing?

Any idea what the answer is?

… Think about it for a moment …

… A bit tricky, right? …

… Any ideas? …

… Could there ever be a time when someone giving you money is a bad thing?

… Here’s a hint: for many people out there, it’s about to happen. In fact, coming up very shortly, millions of people across the country will be getting checks in the mail. And in many cases, those checks will be for hundreds of dollars. Maybe even many thousands of dollars.

Will you be one of the many unlucky people in this country to get a check?

By now you might be thinking, “Is this guy nuts? Why the heck wouldn’t I want to get free money?”

As crazy as it may sound, I say, “Trust me. You don’t want to be one of these people.”

And why is that? Why wouldn’t it be a good thing to get a check in the mail with no strings attached? Is it Ed McMahon’s doing? Did all those unlucky people just win Publisher’s Clearing House Sweepstakes?

No, silly… the checks I’m talking about is something called a “Tax Refund.” And while getting those checks in the mail might first sound like a great thing, this is the one time when it’s really not.

And why is that?

Simple: because you aren’t getting a gift, and you’re certainly not getting free money. You’re getting your own money. Sadly, many people don’t realize this and it’s a real shame, because think about it: all a tax refund really means is that during the year, you “loaned” the government your own money, they received interest on it and all you got back was your own money. Great deal for Uncle Sam, bad deal for you.

Would you give me $5,000 dollars of your money, only to get the same amount back eight months later? (these numbers are all hypothetical, just conceptual to make a point).

Would anyone volunteer to do that?

No one would unless they also got interest, but ironically, when it comes to paying taxes, many people make that interest free loan to Uncle Sam year after year. Getting a refund simply means you overpaid your taxes, simple as that. You either had too much money taken out of your paycheck or you overpaid your estimated taxes, and that’s not a good thing. Your money went working for Uncle Sam, not for you.

So, if getting a refund check this year, don’t go spending it so fast. You’ll only be spending your own money (well, ok – who couldn’t resist a little treat, right? A new pair of Hi-Tops, a big bag of Famous Amos cookies and personally, I’m all set).

To make things more efficient for yourself, don’t kill the messenger bearing the bad news here – if you’re getting a refund this year, be sure to review your estimated taxes or your withholdings with a qualified tax advisor. With little exception, you’d be far better off keeping that money for yourself and investing it whereby you get to reap the rewards, not Uncle Sam.

After all, when it comes to saving for retirement, over time, every last bit definitely helps.