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Easy Ways to Winterize Your Home and Save Money

This is another guest post from my friend Anum Yoon who blogs over at Current on Currency.

Today’s practical post will discuss ways to save money by making your home more efficient in the cold weather.  Floridians and Texans, find another article!

The winter chill has set in. There aren’t too many parts of the country that have escaped the bitter cold and snow. You don’t want to go outside unless you absolutely have to — maybe a quick run to and from the car.

If you’re not a fan of winter, this is going to be a long three months or so. You’ll be inside more, and the only good news is that you’ll have more time to do some the things around the house you may have been putting off.

Also, winter isn’t a booming season for construction, so you might be able to get some discounted prices on materials or projects. Take a look around the house and see which rooms need your attention most.

Winter is a good time of year to attend to your DIY projects or hire out the ones that require professional help. Here are a few investments you can make in your home this winter to improve your living space and add value to your home.

Have Your Furnace Serviced

If your furnace is going to die, it’s probably going to happen on a weekend in the middle of the coldest part of winter. That’s just the way it goes. Better to pay to have it checked now than to pay a lot more later.

Hire a reliable, trusted professional to service your furnace and hot water tank yearly or as recommended. They will make sure both are in good working order and that the filters have been changed for optimum performance.

A professional service can identify any potential problems or maintenance issue before they cause you problems in the winter. If they recommend replacement, feel free to seek a second opinion, but don’t delay too long.

You don’t want to risk being without heat and all the problems that can cause. A new furnace will increase your home’s value and may generate some return on your investment at the time of sale.

Update or Replace Insulation

Your furnace is working hard to heat your home. What a waste of energy and money if the heat is escaping through your roof, wall spaces, or cracks and crevices throughout your home.

If you are confident in your abilities, it might be simple enough to add a few rolls of insulation in places where there is an apparent need. Another idea is to have a professional come out and inspect your insulation.

They may discover leaks you weren’t aware of. Some companies use tiny pieces of insulation that they can spray into your attic. These pieces fill in all the open cracks and areas where leaks can occur.

Other spots you can attend to yourself include the electrical outlets, hot water tank and hot water pipes. You can purchase DIY insulation kits for these areas and accomplish your goals with minimal effort. You can also caulk windows and doors and add weather stripping to stop cold drafts and leaks. The less cold air coming in, the less money going out.

Buy an Energy-Efficient Garage Door

While you are insulating the rest of your house, you might want to consider your garage as well, particularly the door. When that garage door comes open, it’s the biggest open space into your home. All that cold air comes rushing in and hits the outside walls of the interior.

While you have to open and close your garage door, you can cut down on energy costs by purchasing an insulated, energy-efficient garage door. You can keep the inside of your garage at a more consistent, comfortable temperature. It will make any garage projects more tolerable, even in the winter. Your furnace won’t have to work as hard to compensate for the cold air seeping in. It makes sense to have an insulated garage door even if it isn’t attached to your house.

Purchase Energy-Efficient Windows

You know if you have good windows or not. If your rooms stay relatively warm in the winter, they are quality windows. If it feels like the wind is blowing through your living room, your windows are either in poor condition or you left one open.

Investing in Energy Star rated windows will cost a lot of money, but it will save you an average of 12 percent on energy costs. You also may qualify for an energy rebate from your local utility company or state government for making the investment and saving energy. In time, they will pay for themselves. Rotting, drafty single pane windows will continue to deteriorate and, at some point, you will be forced to replace them.

If you think you might be selling your house soon, consider new windows a wise investment and selling point. There is no guarantee you will recoup your money, but your house will be more saleable than your similar neighbor’s house with old windows. Regardless of your intentions, it’s money well spent. It would just be nice if all that money could buy you a better view, too.

Hook up to Smart Thermostat

Instead of wasting money and energy heating your house while you’re at work, hook it up to a smart thermostat you can control online. You can set up a schedule so your thermostat lowers the temperature while you’re gone but starts heating back up before you come home. If you encounter a change in your schedule, you can just log in and make adjustments from your desk at work.

A smart thermostat potentially will save you money, but more importantly, it will give you the ability to control your energy use. You need to look no further than a family member to realize we all have a different idea of what a comfortable temperature is. You’ll still fight over the thermostat.

Improve Your Home This Winter

Things break down, and they don’t always work the way you want them to. But generally speaking, money invested in your house will make it more appealing, more comfortable and more valuable. Plus it’s your home. What better place is there to spend your hard-earned money? Winter will pass before you know it. Wouldn’t it be nice to go into spring already having accomplished some household projects for the year?

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Big Tax Changes You Need to Know About

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (TCJA) into law.  This was one of his pet projects and something he has promising since his campaign.  He also promised that this law would give middle class families a huge tax break.  That remains to be seen.

The TCJA went into effect on January 1, 2018 and it comes with many big changes.  For some people, the effect will be large and there will be lots of planning that needs to get done.  For others, there might be a small change here and there but nothing that would require any real behavior change.

The TCJA provides the first sweeping tax change since the Reagan era.  So it’s important to know how it will effect you.  In this post, I’m going to go over some of the biggest changes in the tax law and what changes you need to make, if any.

If you want to read the bill in its entirety, be my guest.  Otherwise, here are the biggest changes you need to know about.

Much Bigger Standard Deduction

When you file your taxes at the beginning of the year, you have the option of taking the standard deduction or itemizing your deductions.  I’ve written about this before here, but the most common itemized deductions are mortgage interest, property taxes and charitable contributions.  If you have a high amount of these types of payments during the year, chances are you will save more on taxes by itemizing.

This will change for a lot of people this year.  For 2017, the standard deduction amount for single filers was $6,500 ($13,000 married).  The new standard deduction for 2018 will be $12,000 ($24,000 married).  Meaning there will be many more people choosing to take the standard deduction.  This simplifies the tax code in general, but it comes at the expense of other favorable tax treatment as I will explain below.

Behavior change: Most homeowners choose to itemize based on their mortgage interest deduction.  If you won’t be able to do that for 2018 because of the new standard deduction amounts, then the popular mortgage interest deduction doesn’t really provide any benefit.  Depending on your financial plan, it might be time to consider paying your mortgage off early.

State Income and Property Tax Limits Imposed

In 2017, you could itemize your deductions by writing off your state income tax and property tax.  This was an unlimited deduction for the most part.  Helpful for everyone, but especially for those with high state and property taxes.  But change is afoot.

For 2018, you can only deduct a maximum of $10,000 combined state income and property tax.  This is a huge change and will hit those who live in big coastal cities the hardest.  Homeowners in high tax states can easily pay $20K in state income tax and property tax combined.  This rule puts them in a real bind.

Behavior change:  Move or start renting.  For those who live in states like California or New York and have been contemplating a move to a cheaper part of the country, this will give you a little more motivation.

Elimination of Personal Exemptions

This is a key change that will hurt many working professionals with kids.  In 2017, for every member of your family (including yourself), you could take a tax deduction just for being alive.  The value was $4,050 for each family member.

So a family of 4 could take a deduction of $16,200.  This deduction is completely eliminated for 2018.  This is one reason the standard deduction for 2018 will be higher.  It will make the tax code simpler, but will hit couples with children the hardest.  It is slightly offset by the next change I will discuss.

Behavior change:  Not really much you can do here.

New and Improved Child Tax Credit

Tax credits are much better than deductions.  They provide a dollar for dollar reduction in the tax you owe, while a deduction simply adjusts your income a little lower.  The Child Tax Credit has been a nice one that has been around for about 20 years.  It provided families a $1,000 credit for each eligible child.

The problem was, the income phaseout limits were pretty restrictive for many professionals.  For married couples, once their income hit $110,000 the credit was reduced.  For high income professionals, the Child Tax Credit was a pipe dream.

But it is getting a big face lift for 2018.  The Child Tax Credit will now be worth $2,000 per eligible child.  Also, the income limit increases from $110,000 for married couples to $400,000.  

This will make the Child Tax Credit a reality for many couples.  It will also lessen the sting of the personal exemption elimination.  This change is a nice win for all.

Behavior change:  Have more kids!

Tax Bracket Adjustments

The tax bracket changes are another big one.  Essentially all the tax brackets (except the 10%) will be reduced.  And the 35% bracket is widened considerably, which will help high income couples.  Here is the old 2017 bracket:

Here is the new 2018 bracket:

So most people will see a slight decrease in their taxable income.  Not too bad.  This will be the way most people will see some tax savings.

Behavior change:  Employers should be adjusting paychecks to reflect the new tax changes by February.  Just take any extra money you find and add it to your savings and investment plan.  There is no use to have savings if you don’t use the money right?

Student Loan Interest Deduction

Just kidding!  No changes here thankfully.  The deduction maximum of $2,500 remains the same.  Though it would be nice if it was a little higher since tuition rates, and thus student loan balances, are constantly increasing.

Conclusion

The big winners of this tax reform seem to be large corporations, who saw their maximum tax rate changed from 35% to 21%.  Whether this will translate into more cash for employees and a healthier economy, only time will tell.  Families who can take advantage of the Child Tax Credit will also win.

The big losers are high income single filers who own homes in a high cost of living area.  They get hit on so many levels, but especially the state and property tax limit.  Another thing to consider is that these changes are not permanent for the most part.  Many of the big changes will “sunset” in 2027, which will then revert back to the old tax laws.  Nothing in politics is permanent after all.

These changes will affect our returns we do in 2019, so we still have some time to see what the effect on the country as a whole will be.  But it’s important to know the big changes and how you will have to change the way you approach money.  Stay tuned!

(Micheal Kitces CFP provides a great and detailed overview of the tax changes here.  If you want to dig in a little more, this is a great resource.)

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