Personal Finance Considerations for 2007 By Ruth Brock, Regional Extension Agent, Blount County

Try putting into practice some of the following suggestions and watch your personal finances improve.

Tax Incentives for Autos
Have you considered purchasing a hybrid gas-electric car in 2007? If so, you qualify for a $250 to $2,600 tax credit. This tax break phases out once the auto manufacturer has sold 60,000 eligible vehicles. For example, after March 31, you qualify for only half the credit for hybrid Toyotas.

Before March 15
You have until March 15 to use up 2006 flexible spending account bucks. You will want to verify the date by checking with your company's department of Human Resources. Buy new eyeglasses, or load up on products, such as aspirin, contact lens solution, and any other items considered out-of-pocket medical expenses.

Dates to remember
On January 1, the fall college financial aid season begins. Go to fafsa.ed.gov to submit the Free Application for Federal Student Aid.

In 2007, the maximum 401(k) contribution rises to $15,500 or $20,500 if you're 50 or older. You must receive W-2 tax information by January 31. If you don't have the form within a few days of that deadline, verify your address with your employer. If you still don't have the form, call the IRS at 800-829-1040 for assistance.

You have until April 16 to contribute to a traditional or Roth IRA for 2006. The maximum you can save for 2006 and 2007 is $4,000 or $5,000 if you're 50 or older. Those caps will rise by another $1,000 in 2008.

Once a Year
Empty your desk drawers by ditching 2006's pay stubs, undisputed medical insurance claims, monthly credit card and brokerage statements, and credit card and ATM receipts. Keep year-end investment records indefinitely and tax records for at least three years.

Do It Now
If you get a big tax refund, adjust your W-4 withholding by adding another allowance.
Sign up for online bill pay at your bank and save time and money.

Lower your risk of ID theft by stopping credit-card solicitations. Call 888-567-8688. When you call, it is ok to give them your Social Security number.

Last Chance!
Unless Congress acts, 2007 is the last year that certain energy-friendly home upgrades will entitle you to a federal tax credit worth up to $500. You can find details at energystar.gov. Even if you can't claim the credit, plugging drafts, adding insulation, and switching to compact fluorescent bulbs can save you hundreds of dollars on utility bills this winter.

Deal Alert
Fund a 529 college savings plan. Money in these plans grows tax-free, and you won't pay taxes on the withdrawals now that Congress has made that benefit permanent.

Consider shopping around for life insurance. Analysts predict that rates on term life insurance will drop in 2007. If you have a policy and you're in good health, you may be able to save by shopping around. Compare prices by searching the Internet, or contact your local insurance representatives for comparisons.

Plan Ahead
Order your second credit report of 2007 in July. Go to annual creditreport.com.
Have your furnace inspected. Once cold weather hits, repair pros will be busier.
Look for computer deals. There will be discounts on older computers due to new releases from companies, such as Microsoft and Intel.

Look for tax breaks through your employer. Depending on your company's policies, you may be able to stash several thousand dollars pretax in a flexible spending account that you can tap to pay for medical expenses. You can put aside another $3,000 for day-care costs.

These are just a few helpful tips and reminders to help you improve your personal finances in 2007.

For more information on financial topics, visit www.aces.edu, or contact your county Extension office.

References
Bankrate.com. (March 31, 2005). 529 savings plans. College Financing Basics. Retrieved December 20, 2006.

Environmental Protection Agency. (2006). Federal tax credits for energy efficiency. Retrieved December 20, 2006.

Internal Revenue Service. (2006). Latest News. Retrieved December 20, 2006.

Job, Ann. (2006). Hybrid vehicle tax credit: Like a raffle? Auto News & Advice. Retrieved December 20, 2006.

Student Loan Network. (2006). FAFSA free financial aid application form online. Retrieved December 20, 2006.

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