Stephen Merritt, CPA, PC  |  Certified Public Accountants  |  (757) 420-5778
233 Business Park Drive, Suite 104, Virginia Beach, VA 23462

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November 2025:

• Still Time to Reduce Any Tax Surprises!
• 5 Financial Terms Everyone Should Know

Still Time to Reduce Any Tax Surprises!

Consider conducting a final tax planning review now to see if you can still take actions to minimize your taxes this year. Here are some ideas to get you started.

Review your income. Begin by determining how your income this year will compare to last year.

Examine life changes. Review any key events over the past year that may have potential tax implications. Here are some common examples:

• Purchasing or selling a home
• Refinancing or adding a new mortgage
• Getting married or divorced
• Incurring large medical expenses
• Changing jobs
• Welcoming a baby

Identify what tax changes may impact you. There were lots of changes this year thanks to a new tax bill passed this summer. Here are some of the more important changes to be aware of:

• Up to $25,000 of tip income may be excluded from income (Income thresholds apply)
• Up to $12,500 of overtime income ($25,000 for married couples) may be excluded from income ( Income thresholds apply)
• Increase in the standard deduction
• New $6,000 senior citizen deduction
• Child tax credit is increased to $2,200
• State and local tax deduction could be increased to $40,000 (Income thresholds apply).

Manage your retirement. One of the best ways to reduce your taxable income is to use tax beneficial retirement programs. So now is a good time to review your retirement account funding options. If you are not taking full advantage of the accounts available to you, there is still time to make adjustments.

Look into credits. There are a variety of tax credits available to most taxpayers. Spend some time reviewing the most common ones to ensure your tax plan takes advantage of them. Here are some worth reviewing:

• Child Tax Credit
• Earned Income Tax Credit
• Premium Tax Credit
• Adoption Credit
• Elderly and Disabled Credit
• Educational Credits (Lifetime Learning Credit and American Opportunity Tax Credit)

Avoid surprises. Your goal right now is to try and avoid any unwanted surprises when you file your tax return. It’s also better to identify the need for a review now versus at the end of the year when time is running out. And remember, you are not required to be a tax expert. Use the tips here to determine if a review of your situation is warranted and please call if you have any questions about your tax circumstances.

5 Financial Terms Everyone Should Know

Money impacts nearly every part of life. Whether you’re just starting your career, running a household, or trying to grow your savings, understanding a few key terms can give you a real advantage. Here are 5 financial terms that you should understand to help better manage your money.

1) Net Worth = Assets – Liabilities

What it is: Net worth is the bottom line of your financial life. It’s what you own (assets) minus what you owe others (liabilities). The result of this math is your net worth.

Why it matters: Forget income for a second. Net worth is the real measure of how well you’re doing financially speaking. You can make six figures and still be broke if you’re drowning in debt. Tracking net worth shows whether you’re moving forward, stuck in place, or sliding backwards.

Planning tip: Watch your net worth like a financial GPS. Check in regularly. If it’s not growing, it’s time to rethink how you’re spending, saving, or investing. Consider creating this calculation at the beginning of each year, then compare it over time.

2) Compound Interest

What it is: Compound interest is like a money snowball. You earn interest not just on your original cash, but also on the interest on the interest that was made in previous time periods. It’s growth feeding on growth.

Why it matters: This is how small savings turn into serious wealth. Compound interest doesn’t just add, it multiplies. It’s the silent force behind retirement accounts, savings plans, and long-term investments. The sooner you start, the harder it works.

Planning tip: Start understanding and applying compounding NOW! It works in a bank’s favor with mortgages and credit card debt. It works in your favor with savings and retirement accounts. Actively manage it. Search bank accounts that pay reasonable interest (most don’t!). Maximize your retirement contributions. Make extra payments on credit card debt and loans like your mortgage. Even a few dollars invested early can outpace thousands invested later. Time isn’t just money, it’s compounding!

3) Liquidity

What it is: Liquidity is all about access. It’s how quickly you can turn an asset into spendable cash. A $100 bill? Instantly liquid. A house? Not so much. It takes time and effort to sell and turn a home into cash.

Why it matters: When life throws a curveball, you want money as soon as possible, not stuck in a slow-moving investment. Liquid assets give you financial agility, which is essential during emergencies or unexpected expenses.

Planning tip: Keep an emergency fund in something ultra-liquid like a savings account. That way, when things get rough, you’re not forced to sell stocks or real estate at the worst possible time.

4) Debt-to-Equity Ratio (DTE) = Total Personal Debt / Personal Net Worth

What it is: DTE compares how much debt you have to how much you own outright. Your equity is your net worth (see above), which is what’s left after subtracting your debts from your assets.

Why it matters: This number tells you if you’re living on solid ground or skating on financial thin ice. A high DTE means debt is doing the heavy lifting in your life, which is typically risky. A low DTE means you actually own most of what you have.

Planning tip: Track your DTE like a financial vital sign. Aim to lower it over time by paying down debt and building assets.

5) Loan-to-Value Ratio (LTV) = Loan Balance / Current Value of the Asset

What it is: LTV is how much you owe on a loan compared to what the asset (usually a home or a vehicle) is currently worth.

Why it matters: Lenders look at LTV to size up their risk. A low LTV means more equity and less risk for the lender – you’re likely to get better interest rates. A high LTV means you’ve borrowed most of the asset’s value, which can mean higher rates, extra fees, or even being denied a loan.

But LTV isn’t just a bank’s problem. It’s yours, too. A high LTV means you’ve got little skin in the game. If prices drop or something goes wrong (like a vehicle getting totaled), you could owe more than the asset is worth. That’s called being underwater, and no one wants to drown in debt.

Planning tip: ALWAYS keep your LTV under 80%. 50% is a safer target. The more equity you build, the more control and options you have, whether you’re refinancing, selling, or just sleeping better at night.

Financial literacy isn’t about knowing everything. It’s about understanding the basics well enough to make smart decisions. These five terms are your starting blocks. Get familiar with them and you’ll be able to build a stronger financial future.

Be Debt-Free: Graduate With Zero Student Loans

A growing number of students are saying no to paying for higher education with student loans. Here’s how to join the growing number of students graduating debt-free, often by using unconventional approaches.

• Serve before studying: Military service. Military enlistment remains one of the most reliable routes to a fully-funded education. The Post-9/11 GI Bill not only covers in-state public tuition or contributes toward private schools, but also provides housing stipends, book allowances, and even the option to transfer unused benefits to a spouse or child. Active-duty personnel and reservists can also qualify for other tuition assistance programs that cover college courses taken during service.
• Potential tradeoffs: Enlistment requires several years of service, during which you may face deployments, relocations, and the demands of military life. While these experiences can provide leadership skills and career discipline, they also delay immediate entry into civilian education or employment.
• The gap year that pays off. Delaying college to work full-time is another strategy for avoiding student loans. By taking a gap year, or even several years, students can earn a steady income, build savings, and gain valuable work experience before stepping onto a campus. Postponing college also gives students time to clarify their goals. A year or two in the workforce provides insights on career paths that can be used to make more intentional choices about their fields of study.
• Potential tradeoffs: Taking time away from academics can make it harder for some to get back into a rhythm of rigorous coursework. Some students risk losing academic momentum altogether. A delayed start also means graduating later, which can postpone entry into certain careers.
• Beating the clock: Accelerated and AP credit. Students may be able to enter college with a head start, sometimes as a sophomore instead of a freshman, by maximizing Advanced Placement (AP) courses or dual-enrollment credits while still in high school. In addition to AP credits, some universities now offer formal three-year or accelerated degree tracks designed to condense a traditional four-year program into a shorter time frame.
• Potential tradeoffs: The pace of accelerated education can be demanding. Students often carry heavier course loads, enroll in summer or winter sessions, and have less flexibility for internships, study abroad, or part-time work. In some cases, moving through requirements quickly can limit the exploration of different majors or electives.
• Employer-sponsored degrees. More companies are offering tuition assistance or direct sponsorship for employees pursuing degrees or certifications as the competition for talent increases. Some companies partner directly with universities or online programs, creating a simple pathway for workers to earn degrees in fields related to their jobs. Many employers now extend these opportunities beyond management, also offering assistance to front-line workers in retail, hospitality, healthcare, and manufacturing.
• Potential tradeoffs: Balancing work and study can be challenging, often stretching degree timelines to five or more years. Some programs require employees to remain with the company for a set period after graduation, tying educational opportunities to job loyalty.

While student loans remain the norm for many, the rise of debt-free graduates shows that alternatives do exist. These paths may be unconventional, but they show that a college degree or technical certification doesn’t have to mean decades of repayment.

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