Wednesday, February 27, 2013

That time of year....

With the beginning of March we know that April is not far behind - April 15th specifically.  If  you're like me that little voice starts reminding me to work on my income taxes.  Start it, get it done, get it over, then relax for another year.

But this activity presents a unique opportunity to review our personal finances while we have all these statements spread out on the kitchen table.
I will make a few suggestions.  Pick one and promise yourself to complete it before the end of April:

1. Examine your credit cards.  Choose one to pay off completely.  Preferably the one with the highest interest rate.  Carrying debt on several cards means you are paying for the privilege of owing someone money.  Interest payments buy you that privilege.  You have nothing to show for that money spent.  Make yourself richer, not the credit card company.

2. Review your 401k (403b) and increase your contributions by 1%.
Taken out of your paycheck over 26 paychecks that will be a small pinch in your take-home pay.  For every $100 contributed, you take home app. $65 less because you are not paying taxes on the $100.  Build your retirement fund so you may retire in style.

3.  Go to breakfast.  If you are the primary bill payer, take your partner/spouse out for breakfast one Saturday morning.  Request a booth with privacy and talk about MONEY.  Too often we forget to share and compare money coming in with money going out.  Too often something unexpected happens and one party has no clue how to handle the household finances.  Give your partner confidence in handling this chore.

4.  Call your broker/financial advisor and schedule an Annual Review.  No one cares about your money as much as you do.  Make sure your advisor knows that.  Share any changes in your life, like getting married, a new baby, a career change, an impending move, etc.  All life changes will impact your financial goals.  Your advisor needs to have this information to allocate your investments appropriately.

5.  Boost your Emergency Fund.  Today's news reported J.P. Morgan Chase will be laying off 19,000 employees.  Are you ready for a possible layoff?  Do you have 3-6 months of savings to carry you through a job search?  Call or visit your bank and have $25, $50, or $200 per month deducted from checking and put into a savings account.  Start small if you must, but increase the amount over time.  Having a "rainy day" fund is old fashioned but very satisfying if/when you need it.

Which one did you pick?  Good for you!  You're on the path to financial security.