The Internal Revenue Service announced that it is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.

The IRS is generally waiving the penalty for any taxpayer who paid at least 85 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two. The usual percentage threshold is 90 percent to avoid a penalty
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https://www.irs.gov/newsroom/irs-waives-penalty-for-many-whose-tax-withholding-and-estimated-tax-payments-fell-short-in-2018

Have you ever heard someone say that experience is the best teacher? Here’s another one - there are no mistakes, just lessons.

Well, I would like to take a slightly different tack. Experience isn’t the best teacher. Someone else’s experience is. Learn from other peoples’ mistakes and you can save yourself a lot of grief.
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In that spirit, I’d like to review the biggest financial mistakes I’ve seen and offer you ways to avoid them.

1. Living paycheck to paycheck

Too many Americans don’t have enough money in savings. According to CareerBuilder, nearly 80% of Americans live paycheck to paycheck to make ends meet. And lest you think this applies only to those who are in low-wage positions, nearly one in ten workers who earn over $100,000 or more are in the same boat. (http://press.careerbuilder.com/2017-08-24-Living-Paycheck-to-Paycheck-is-a-Way-of-Life-for-Majority-of-U-S-Workers-According-to-New-CareerBuilder-Survey)

I’m shining a bright spotlight on this predicament in the wake of the recent government shutdown. During the closure, we were treated to a healthy dose of stories from federal employees who were running out of money after missing one or two paychecks. And these folks were guaranteed back pay and were offered plenty of assistance from banks and credit unions! 

I’m not trying to minimize the frustration many of them experienced, but imagine what might happen during an extended period of unemployment.

Don’t wait to start socking money away. Pay yourself by stashing away funds after each pay period. I would recommend at least three to six months of emergency funds. And I find in many cases six-12 months is even better. A financial house that is in disorder is among the leading causes of stress. Savings will mitigate the emotional and mental burden.

2. You can’t start too early saving for retirement

We all know the reason earlier is better–it’s the magic of compounding. Those deposits made in our 20s will have a lifetime to grow. Don’t waste the chance to increase your savings now. You’ll never get it back.

3. Do you know where your money goes? 

Without a spending plan that tracks expenditures, you may wonder why there is month at the end of your money, and not money at the end of your month.

I can tell you how much we spent on gasoline in March 2001. That may sound extreme, but tracking expenses allows you to review and control what you want to happen. 

Focus on the essentials–rent, mortgage, utilities. Leave room for your financial goals–repaying debts, retirement, emergency funds. And have some fun by budgeting for lifestyle choices–recreation, hobbies, vacation, and so forth.  

4. Credit cards and personal debt 

Credit cards are a convenience and most pay some type of reward. But don’t place yourself in bondage to monthly payments. Pay them off in full each month or you will suffer from steep interest charges.

If you feel like you’re buried under a mountain of credit card debt, an auto payment, student loans, and personal debt, you’ll need a plan of attack. Let’s talk. It will be the best financial decision you ever made. Just knowing there’s a roadmap to debt-free living will be liberating.

5. Those luxury purchases

That new car sure is fast, the ride is exceedingly quiet, and it has all the latest gadgets. But the new car smell will eventually wear off. The payments, however, won’t. When looking for a new vehicle, what you don’t know can hurt you. What is the gas mileage? Does is require an expensive grade of gasoline? What will it cost to insure? And what will the annual license renewal run?

If you can answer these questions and the payments comfortably fit into your budget, you’ll sidestep any surprises that could crowd out your hobbies and financial goals. 

A tribute to Jack

“You cannot measure the quality of a man by the size of his bank account, but in Jack Bogle’s case, you can measure it by the size of your bank account. No one on this planet has done more to increase the lot of individual investors in the last 50 years than John C. “Jack” Bogle, founder and former chairman of the Vanguard Group and creator of the world’s first index mutual fund.” – Forbes

“If there is ever an official investor hall of fame, Jack Bogle would be a lock as a unanimous first-team ballot winner in the inaugural class.” – The Motley Fool

“I don’t believe that there has ever been, nor will there ever be, anyone who has given more to investors and taken less in return than Jack Bogle.” – Morningstar

Jack may not have the name recognition of the legendary Warren Buffett, but his contribution to the world of investing can’t be understated.

He founded the Vanguard Group in 1974 and pioneered the first index fund two years later, a mutual fund that was tied to the S&P 500 Index (Investopedia). Investors ponied up just $11 million. It was mocked as “Bogle’s Folly.” 

Today, there are over $13 trillion invested in passively managed mutual funds or exchange-traded funds (ETFs) worldwide, according to Barron’s.

Jack’s idea transformed an industry, significantly lowered costs for large and small investors, helped democratize investing, and, let me add, is a staple to the approach we use to assist you as you run the race to your financial goals.

In a CNBC interview last September, Jack said, “If you hold the stock market, you will grow with America.” If you attempt to time the market, “Your emotions will defeat you totally.” 

His long-term approach has paid dividends for disciplined investors.

Jack passed away on January 16. He was 89 years old.