If you are like many people, you may easily spend hundreds of dollars or more on holiday gifts and related holiday purchases each year. Some sources (For example, Forbes)indicate that consumers may spend more money over the holiday season this year than they have in previous years. The cost of gifts is only one seasonable expense. For example, you may have plans to host a party, travel or decorate the house elaborately. When you are preparing to spend a large sum of money within a short period, financial planning is necessary. Some people may be thinking about taking money out of a retirement account<\/a> to cover seasonal expenses, but this is not advisable for many reasons. <\/p>\n\n\n\n
The Tax Penalties<\/strong><\/p>\n\n\n\n
When you take money out of your retirement account before the withdrawal date, you face the expensive prospect of having to pay an early withdrawal penalty<\/a>. More than that, if you are taking money out of an account that used pre-taxed funds, you will also need to pay taxes on the amount of money that you withdraw. In some cases, this extra income that you are taxed on will bump you into a higher tax bracket. This can magnify the impact on your tax liability for the year. As you can see, it can be very expensive to pay for your expenses during the holidays through this type of funding.<\/p>\n\n\n\n
The Impact on Your Financial Future<\/strong><\/p>\n\n\n\n
A Better Solution for Shopping During the Holidays<\/strong><\/p>\n\n\n\n