An Iowa financial consultant says we should start setting aside more savings in case that so-called fiscal cliff can’t be avoided by Congress. Jeff Strawhacker, a longtime CPA in West Des Moines, says he’s not optimistic our national leaders will come up with a valid compromise plan to avoid the large, looming tax increases before the year is out.
“I think the key here is just to plan going into next year,” Strawhacker says. “If everything holds as it’s scheduled to take place right now, there’s going to be some increases for just about everybody and it’s just more planning that say, we may have a little bit less money for day-to-day spending and may have a little bit higher tax liability. The key is just planning.”
Federal taxes could be taking a much larger bite from our paychecks as of January 1st and Strawhacker says if you’re not already saving money for a rainy day, it’s a wise practice to start, fiscal cliff or not.
“It’s very difficult to just say, ‘Okay, I’m going to set aside a big lump sum,'” Strawhacker says. “The easier way is to do it every paycheck, every month, whatever, just start setting a little bit aside because then it becomes routine, it becomes habit and you don’t find yourself missing that little bit of money you’ve been setting aside.”
Strawhacker, who focuses his accounting business on financial consulting and tax planning, says there’s plenty of partisan bickering in Washington, so he’s none too confident in members of Congress. “I think they will come up with some solutions before the end of the month,” Strawhacker says. “I don’t have a highly positive outlook they’re going to solve all of the problems. I think some of it may roll into 2013 and we’ll get more answers then.”
The “fiscal cliff” involves a series of $500-billion in tax increases and $200-billion in budget cuts which are scheduled to automatically take effect on or around January 1st. Without action by Congress and the White House, some analysts fear the financial jolt could prompt a recession.