PERSONAL FINANCE: The history of resolutions

How are you doing on your New Year’s resolutions? By now you are probably aware of the research that shows as many as 50 percent of adults in the United States make New Year's resolutions, but fewer than 10 percent actually keep them for more than a few months — but do you know the history of those resolutions?

It turns out that the ancient Babylonians are said to have been the first people to make New Year’s resolutions, some 4,000 years ago. They were also the first to hold recorded celebrations in honor of the New Year, even though for them the year began not in January, but in mid-March, when the crops were planted. During a 12-day religious festival known as Akitu, the Babylonians crowned a new king or reaffirmed their loyalty to the reigning king. They also made promises to the gods to pay their debts and return any objects they had borrowed. These promises could be considered the forerunners of our New Year’s resolutions. If the Babylonians kept to their word, their (pagan) gods would bestow favor on them for the coming year. If not, they would fall out of the gods’ favor — a place no one wanted to be.

If you made some resolutions for 2021, I hope that one of them, like the Babylonians, was to pay down any high-interest-rate debt that you may be carrying, and, also, to accelerate the repayment of any debt, including a mortgage or a student loan, I hope that you keep that resolution so that the” the gods will bestow favor on you,” in the form of more money in your pocket to use for other things, because you will be spending less of your hard-earned money on interest costs.

Another subject that we have discussed in the past is the use of any Required Minimum Distribution from your IRA or other qualified income tax deferred retirement account to make charitable donations. As we have discussed, even if you otherwise itemize on your tax returns, and could take those donations as a deduction, making them as a RMD results in a slight tax advantage. In these challenging times for so many, this is something that you may want to consider more than in past years if you must make these distributions.

New for this requirement is that under the Secures Act, the required beginning date has moved to age 72 from 70 ½, effective for retired individuals who reach age 70 ½ after Dec. 31, 2019. It is also important to note that there can be up to a 50% penalty for any required distribution that is not made.

A final point is that the Required Minimum Distribution is determined on Dec. 31 for the following tax year, based upon your IRA balances and life expectancy. As was the case last year, if you are heavily invested in the stock market, most of the indexes closed relatively high on Dec. 31, 2020, so RMDs may be high, no matter what the markets do in 2021.

While we are on the subject of taxes, we don’t know yet whether the new Congress, sworn in on Jan. 3, 2021, will eventually pass another stimulus/relief bill that will provide aid to states, like New York, that are running significant deficits, because of the pandemic or otherwise. Whether that will happen or not, there is increasing talk once again about raising taxes on the highest earners in New York state. When you look at the statistics on the percentage of income taxes that are paid by the highest income earners, as opposed to overall taxes, I continue to struggle with the claim that that they don’t pay their “fair share.” That wouldn’t be the case if, as we also have discussed, we had a flat income tax that everyone had to pay. Then it would seem that everyone would be paying their fair share.

On a different subject, I have yet to hear or read a detailed explanation for why some Americans, who a number of politicians say don’t “need” them, are getting presently passed or proposed stimulus/relief checks. An example is, couples earning a combined income of $140,000 in 2019, none of whom have lost their jobs or had their income reduced in 2020, and who have no children and don’t live in a high cost-of-living location. Whenever I hear an opposing politician say that, the media interviewer or politician in favor of the payment just moves on, and doesn’t say something like "it would be too difficult for the federal government to determine true need in a timely manner, so it’s easier to make it a 'universal payment' based upon past income." I must be reading, watching, or researching the wrong sources, or, maybe the inability of the government to determine true need in a timely manner is so obvious that it doesn’t need to be stated. Of course the opposite problem can result from the non-targeted universal payment. There are many Americans, whose incomes were above the cut-offs in 2019, that lost a job or significant income in 2020, and could use the payment.

In any event, if there are Americans who will be receiving a stimulus/relief payment that they don’t need, I hope they will consider giving at least a portion of it to a charity helping those who are in need.

There was almost nothing normal in 2020, but it wouldn’t be normal if I didn’t include at least a few financial survey results at this time of year. So here are some not very surprising results from a recent WalletHub survey. One in 3 Americans say the 2020 holiday season was worth going into debt for — a 46% increase over last year; 53% of Americans think the U.S. economy will not go back to normal in 2021; and nearly 1 in 3 Americans say 2020 was a “poor” year for their finances.

Be safe!

John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program. Find his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo.

This article originally appeared on MPNnow: PERSONAL FINANCE: The history of resolutions

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