New Year’s Financial Resolutions
It’s that time of year again when we are all over fed and over spent. It is the time that we see old friends at the gym again. Not close friends. Just ones that you met last year around the same time and haven’t seen since February. It is the time that the other 93.3% that still have jobs start dropping resumes so we can escape our dead end jobs. Well, maybe not this year since we are probably grateful just to still have an income. It is the time we commit ourselves once again to eliminating debt and saving more money. WAIT! WAIT! This one we can help you with.
Spend Less
There are two main ways of helping yourself in being financially secure. These two are spend less and earn more. While earning more in the current economic environment might be a little more difficult, the truth is that most of us can afford to spend less. Some of us can’t afford not to spend less as we take on increasing amounts of debt. Unfortunately, living at our means is something American’s aren’t terribly good at, or fond of, but we might be surprised at how easily we can make adjustments to live below our means.
Dr. James Choung takes the idea of living below your means one step further. Perhaps you’re already making a pretty nice chunk of change. Choung suggests picking a number, perhaps your county or city’s median income, and making that the limit at which you spend in the interest of being able to donate more. Maybe it is some left over holiday spirit, but really, what good is a big pile of saved up money if it doesn’t eventually get spent or given away? How you can adjust your own spending will vary for everyone, but it is certainly worth giving it some good thinking. Spend less, give and save more.
Save More
And one more time: save more! Perhaps you have heard the phrase “pay yourself first”. The concept is as easy as that. Before you pay a single bill, pay yourself. If you haven’t done so already, set up a monthly recurring deposit for yourself in to a high-yield savings account. Instead of remembering to save, just put savings on auto-pilot. E-mail us if you need suggestions or you can go here.
The beginning of the year is a great time to examine your 401(k) or 403(b)s if you have them. If your employer offers one and you are not participating, you are missing out on tax-free compounding of your retirement savings! Even if you can only afford to put away a little bit, as we’ve covered before, a little bit now can really payoff in the future. Payroll deductions in to these employer sponsored retirement accounts are taken right out of your paycheck. If you never see the money, not only can you not spend it, but you won’t miss it as much either.
Perhaps for you, the way you can “save” is by reducing your debt. Resolve to hack away at any high interest credit card debt, starting with the cards charging you the highest rate. This not only saves you in interest payments in the long run, but eliminating debt will help you get rid of a recurring cost and redirect those payments in to recurring savings.
Portfolio Maintenance
Again, the beginning of the year is a great time to reexamine not only your employer sponsored retirement accounts, but also any other investment accounts you might have. Be sure to check your allocations and make sure you’re not concentrated too much in any single area. Then rebalance your portfolios if necessary.
Perhaps you have changed jobs in the last year and have put off or simply chosen not to roll over your old 401(k). Consolidating your 401(k) in to a Rollover IRA makes it easier to manage your account, turning your often choice deficient 401(k) in to a self-directed portfolio tailored to your own needs. It also helps to create a Rollover IRA so that you can roll any of your future 401(k) accounts from the many employers you will have in your lifetime in to one easy access place.
We are excited to be bringing you a few more site “features” in the next few weeks, including some model portfolios that might make that portfolio maintenance a little easier. All of us at Eqwitty.com would like to wish you a very prosperous and happy new year. We hope to be your one-stop spot for all your personal finance needs in 2009.
December 31st, 2008 at 10:27 am
I would suggest a few other new years financial resolutions. Focus on using you financial capital to invest more and consume less. What I mean is, spend your money on stuff that will have lasting results or create, lead, catalyze lasting results. I guess a few examples of what I mean might be: choosing to cook a some new dishes with a friend, instead of going out to dinner; buying a board game and playing it with friends instead of going out to watch a movie. There is a communal aspect of investing in each other that has lasting effect, beyond our tendency to just consume together.