As 2015 begins and the New Year’s resolutions start to fade, here’s a financial checklist for 2015 that can help make those resolutions a reality or enforce some good habits you’ve started.
- Pay Yourself First. This is a phrase you’ve heard us pontificate many times in the past and the concept is relatively easy to understand and simple to implement. When you get paid, have a certain percentage (we recommend at least 10 percent) automatically deducted from your check into your 401k, 403b, 457, etc. If there’s an employer match that’s extra gravy. Don’t have an employer-sponsored plan? Set up and automatically save to an IRA. Ambitious folks can and actually do both. Live off the rest of your money that’s left over.
- Pay down debt. Want a guaranteed rate of return? Simply pay off your debt early and you’ll be giving yourself that interest rate rather than paying it to the lender. Some folks will argue whether or not to pay off home debt early – that choice is yours. But for consumer debt such as credit cards, student loans and vehicle purchases consider paying this debt off as soon as possible.
- Give yourself a raise. Since tax time is approaching this shouldn’t be too difficult to do. Go through your 2014 receipts, credit card and bank statements and look for purchases that were entirely discretionary – meaning you didn’t have to purchase the items. See which ones you may be able to eliminate for 2015 such as dining out excessively, daily coffee, etc. Use the excess cash to fund your retirement plan and or pay down debt.
- Check your insurance. Consider checking your health, auto, homeowners, life and other insurance coverage to make sure you’re still properly covered or have excess coverage. Many times premiums can be reduced by raising auto and home deductibles and removing comp and collision on an older vehicle. Do you qualify for more life insurance through work? If so, consider getting as much as you can. It’s cheap and generally no underwriting is required. Likewise with disability.
- Get a financial check-up. Talk with a professional (not a salesperson) regarding your finances and see if he or she has any recommendations or ideas you may not have considered.
- Invest in yourself. Commit to reading at least one personal finance book per quarter and build from there. You’ll be so far ahead of the game the more you keep yourself informed and better prepared to ask questions about your specific situation. If you’re looking for recommendations, please ask myself or Jim. We’ve read many. Consider avoiding the cable news shows, books and websites dedicated to stock picking and fast money.
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