Better Financial Footing for 2009

January 23, 2009 8:04:46 AM PST
Often, New Year's resolutions focus on altering unhealthy lifestyle habits such as smoking, weight gain or poor fitness. And while improving each of these is indeed important, one should not overlook the beginning of the new year as an ideal time to take action against those financial habits or situations that stunted our financial fitness over the past year. To that end, Joan Jensen, president and CEO of The Central Credit Union Of Illinois shares with us her list of 'must-take' steps for improving personal finances that should be taken early in 2009. Addressing these six important topics right off the bat will go a long way in helping ensure a happier and more financially fit 2009.

GET CONTROL OF DEBT

Uncontrolled debt, whether from burdensome credit card balances or excessive spending, is THE 800-pound gorilla that limits our ability to save.

  • Itemize debts, prioritize accounts, develop a realistic repayment plan and stick with it.
  • If needed, consult with a pro. For help in finding a properly certified pro, talk to friends and family for recommendations or visit the National Association of Personal Financial Advisors (NAPFA.org) or The American Institute of Certified Public Accountants(AICPA.org) where you can find a list of CPAs who have earned the designation of Personal Financial Specialist.
REVIEW MORTGAGE AND CREDIT CARD RATES

Consumer loan rates continue to fluctuate and today's lower rate environment might just translate into substantial savings.

  • Contact your current mortgage holder (and other legitimate lenders) to discuss sensible refinancing options.
  • Call the companies for each of your credit cards and request a lower rate.
  • Visit Bankrate.com for tools helpful in determining if refinancing will be beneficial.
BUILD LIQUID RESERVES

Even the best-laid financial plans can be side tracked by the unexpected car or home repair. Be prepared.

  • Set an initial emergency fund goal that makes sense for your circumstances. $2.75 a day will put you over $1,000 within a year.
  • Continue building the fund until you accumulate at least six months of your household's take-home salary.
  • Keep fund monies readily available in vehicles such as high-yield savings accounts.
START ADDRESSING TAX-RELATED MATTERS TODAY

Reduce tax stress and minimize last-minute frenzy mistakes by taking these simple actions.

  • Begin gathering the tax records and necessary forms you will need today.
  • Review and if necessary, revise W2 deductions to put more money at your immediate disposal.
  • Apply any refunds to either jump starting debt pay down or to building the emergency fund.
GET AFFAIRS IN ORDER

If you have these important documents in place, review them to ensure they accurately reflect your wishes. And if you haven't, take the time to put them in place to protect yourself and your loved ones.

  • Create Durable Power of Attorney for medical and financial affairs, the legal documents for appointing another person to act on your behalf.
  • Living trust: the legal document that allows you, or a person you name as trustee, to transfer ownership or title to your assets into a trust while you still remain in control of those assets.
  • Last Will and Testament: the legal document that gives specific directions about where and to whom your assets should go.
  • Appoint beneficiaries on all insurance policies and financial accounts.
AUTOMATE FINANCES- Employ technology to save time and money.
  • Sign up for online banking with institutions that provide the service free of charge.
  • Avoid late fees and other penalties by scheduling convenient online payments.
  • Automate retirement and savings contributions.

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