Here are the 5 financial tips for the 2^nd week of December 2012.

Tip no 1: Update your business records before applying for a business loan.

Business records help you know how your business is performing. You can have a proper idea about your business. You can know if your business is making profits or loss. If your business is incurring losses, then you'll have to curtail your expenses. There is yet another reason to keep business records. Lenders would want to know how your business is performing before granting you a loan.

Lenders may want to check your business records before giving you money. This will help them determine if you can pay off the loan. If your business record is not properly updated, then lenders may simply reject your loan application.

Tip no 2: It's always advisable that you start saving for retirement as early as possible.

You'll retire one day. So, isn't it better to start saving for that day from a young age? You've the maximum earning and saving potential at a young age. You don't have big financial responsibilities such as taking care of your family or raising children.

Set aside a good amount every month from your paycheck. Study the different features of the retirement plans. Choose a plan and start saving money in the retirement account. You can even set up a system with the bank so that a certain amount is automatically sent to the retirement savings account every month.

Tip no 3: Use the IRS Form 982 when you file your taxes to exclude certain forgiven debts from your gross income.

The IRS regards cancelled or forgiven debt as the taxable income. If your creditor/lender has forgiven a portion of your debt, then you’re required to pay tax to the IRS. You need to fill out form 982 in such a situation. You can download the form directly from the IRS website. You'll get detailed guidelines in the form only.

Give the required information in the form. For instance, you've to specify why your debt was forgiven. Once it is done, check and submit the form along with your income tax returns as soon as possible.

Tip no 4: Tax refunds and Social Security benefits can be garnished to offset Federal student loan debt.

If you fail to repay federal student loans, then be prepared to lose your tax refunds and Social Security benefits. The IRS can interfere and offset your tax refund. You won’t get any tax refund. Rather, the Department of Education will be receiving the money. It is just a strategy to recover federal student loan debt.

Apart from the tax refund, the federal government can garnish your Social Security benefits also. The government can garnish up to 15% of your total Social Security benefits.

Tip no 5: Revoke ACH authorization before closing down your bank account.

Are you combating with an illegal payday loan lender? Do you want to stop the illegal payday loan lender from debiting money from your checking account? If yes, then you need to revoke ACH authorization as quickly as possible. You can have a talk with the bank branch manager and terminate the ACH transaction. You have to complete the formalities and send a letter to the illegal payday loan lender about the step you’ve taken. The payday loan lender won’t be able to debit money from this account. Once you’ve done so, you can close the account easily.