10 year-end money strategies to consider

The stroke of midnight at the end of Dec. 31 does more than signal the close of the year. It also represents a reminder to make many important money decisions that can affect your long-term financial well-being in the New Year and beyond.

Here are several ideas you should consider before we begin 2012:

1. Make charitable contributions before the end of the year - Be sure to collect itemized receipts.

Higher-income households also might want to donate stocks, bonds or other assets that have increased in value. When made to a qualified charity or other not-for-profit organization, the amount you donate can be deducted, up to 50 percent of your income.

2. Pay next year's real estate taxes - If you are a homeowner - and your income is higher this year than you anticipate it will be next year - talk to your lender about automatically paying next year's real estate taxes in a lump sum out of your escrow account or cash.

If payment is received before Dec. 31, you can take the deduction on this year's income tax form.

3. Have a bonus deferred into January - If you're in line for a year-end bonus or other distribution, you might want to see if your employer is willing to defer into January.

This pushes the taxable income into the next year.

Also, consider not spending this bonus windfall but putting aside at least a portion of it for your retirement years.

4. Start a qualified retirement plan by year-end - If you are self-employed or a business owner and have been thinking about starting your qualified retirement plan, do it by year-end.

If necessary, you can defer funding it to your tax deadline next year. However, in many cases, the plan should be in place by year-end.

5. Pay your January state income tax bill in December - If you are self-employed, pay your January state income tax installment in December for another current-year deduction.

6. Convert your traditional IRA to a Roth IRA - If you convert in 2010, you have the option to defer the taxable income from the conversion to your 2011 and 2012 tax returns.

Plus, beginning this year, there is no income limit to be eligible for a conversion.

7. Review your financial goals - This will help keep you focused on your objectives and what you need to do to achieve them in the future.

Decide where you want to be in the years ahead. By reviewing your assets and making sure your strategies and goals are on track, you can begin working to achieve them.

Start by deciding where you want to be one year from now, two years from now, five years and, finally, at retirement. Write everything down, starting with a wish list, then narrow it down by focusing on the goals that are most important to you.

Examples may include having a specific dollar amount on hand for your children's educations, having the mortgage paid off by a certain year or accumulating a specific size nest egg by age 62. Writing down goals can give you a road map to follow.

8. Identify specific activities that will help you achieve your goals - If you want $40,000 available in 15 years to pay for junior's college, determine how much money you must put aside every month to realize that goal.

Be as precise as possible. Check with your state's 529 Plan to see if you qualify for a state tax deduction, credit or matching contribution for 529 Plan contributions.

Earnings are fully exempt from Iowa state income tax. In addition, withdrawals are exempt from Iowa state income tax when used for qualified higher education expenses.

Iowa taxpayers can deduct up to $2,865 in contributions per beneficiary account from their adjusted gross income for 2011. So for example, a married couple with two children contributing to separate accounts can deduct up to $11,460 - that's 4 x $2,865 - in 2011.

9. Review your life insurance coverage - Make sure it has kept pace with your income and family responsibilities.

Adequate insurance is still one of the best ways to protect your family's financial security if you die prematurely. Most of all, insurance helps protect what you already have achieved and can fund the future for your loved ones if something happens to you.

10. Review your debt load - Make sure it is not excessive.

Debt is a tool that can help you achieve your financial objectives. But it must be managed carefully.

If possible, bring your credit card debt down to zero, using debit cards rather than credit cards to help keep your borrowing in check.

These are just some of the financial steps you should consider as we wrap up the year. The idea is to take a proactive approach to your finances, putting yourself in control to save taxes and build wealth for the future.