A 2004 survey by the American Psychological Association reported that 61 percent of Americans considered money issues their number one cause of holiday stress. Want to get a head start on a better holiday season in 2007? Start with some important resolutions to improve your financial life.
Resolve:
1. To track your spending. If you haven’t purchased financial accounting software or set up a reliable accounting method of your own, this is the year to do it. Expense tracking is the first critical step to getting personal finances in order.
2. To write down your goals. Have you ever written down the big things you want in life? Granted, all great dreams don’t cost money, but many of them do. Money buys freedom—to travel, to retire early, to start a business, to change careers. Putting goals in writing gives them a formality and a starting point for the planning you must do.
3. To consider advice on taxes and planning. Maybe you’ve always winged it with your taxes and considered your company 401(k) the ticket to your financial future.
Chances are your planning is inadequate. Start getting references on good tax professionals and consider sitting down with a CERTIFIED FINANCIAL PLANNER™
(CFP®) professional to discuss your current retirement savings picture and what you can do to improve it.
4. To cut your credit card debt. If you can’t ever seem to get yourself completely out of credit card debt, make this the year to do it. Take inventory of your balances, figure out if you can consolidate them under your lowest-rate card, and resolve to pay off an amount that exceeds the minimum—on time, every month. Oh, and pay cash from now on.
5. To save. If you haven’t started an IRA plan or begun a savings plan tailored for the self-employed, this is the year. And resolve to save at least 5 to 10 percent of your take-home pay, and place the maximum in whatever retirement savings plans you qualify for.
6. To consider prepaying your mortgage. This advice isn’t for everybody, but if you’ve paid off your credit cards by paying more than the minimum, consider applying the same principle to your mortgage payment. Every dollar you prepay will potentially save thousands in interest over the life of the loan if you plan to stay in your home longterm.
