I am sitting here on my lunch break trying to catch my breath. I am working on Day 2 of back-to-back conference calls that start at 8:30 a.m. and go to 5 p.m. Today, I demanded (of myself) that I at least give myself a lunch break (still working diligently on "taking a swim in lake you" it is a daily battle with myself). As I was doing some chores, yes I understand that doesn't constitute "lunch break" but for other working women (and men) out there, you are in full understanding of what I am saying...we have to do what we have to do, huh?! I digress. Anyway, as I was catching up on some chores I started replaying conversations from this morning in my head. Anyone else do this?? I often describe my mind as a tape recorder that is recording everything, but every once in awhile I have to hit rewind and listen to something again. The funny moments are when, in the middle of a conversation with someone, my mind does it on its own. Fun to be me. :)
I gotta get to the point. :)
I had a question from someone this morning regarding a 401K issue and this led to thoughts of other questions I have gotten asked recently. Now lets do a disclaimer here....I am not speaking on behalf of any institution or product. I am also not speaking in a manner that should say to you, do exactly as she says, "do not pass go, do not collect $200" sort of thing. Take what I say with a grain of salt, and then find a professional to consult with about your specific situation. Let me tell you one thing that is not emphasized enough in personal finance...everyone's situation is unique. We need to have someone advising us that is taking the time to understand our personal needs and wants. Now, that said, remember that you/we have to make time for them too.
So, in that vein, here are my top ten personal finance tips that I would recommend you consider...because this is the PERFECT time of year to do so. Why not now when you are doing so many other "financial" check-ups. I advise people to do them all at the same time of year. Why? Because for non-finance types, messing with financial to dos is worse than going to the dentist. I say, get it all done at one time ~ rip that band-aid. :)
- Do Your Taxes Early. This is a classic mistake people make (myself included), but it is a biggie. If you are due money, why would you want the government to keep your money for any longer than you have to?? On the flip side, if you owe...don't you want to know that sooner rather than later so that you can make a plan on getting it paid OR in a worst case scenario, you have time to work out a plan with the IRS. Proper planning saves a lot of pain. Words to live by. :)
- Check Your Credit Score. I have always advised people to do this, at a minimum, once a year. I utilize True Credit in my personal life because it allows me to not only check all three credit bureaus' reports, but they also have a service that you can sign up for that checks your reports monthly. Each month they send you an e-mail that lets you know you are in the clear or that there have been changes to one or more of your reports. In this day and age, there are two items that can make or break your financial health ~ your social security number and your credit score. They both need to be protected just like your home. Look at checking your credit score on a regular basis as good (cheap) insurance. You want to make sure there are no errors because if there are, it will take you a few weeks (best case) or several months (worst case) to get those fixed. You also don't want to come up with a loan need and get declined or a less than favorable rate because "something popped up" on your credit bureau that you were unaware of. Being proactive will payoff in the long run.
- Check Your 401K/Investment Statements. I open all of my investment statements once a year around tax time. I don't need the additional stress of watching them go up and down every week, month or quarter. So, I get them in the mail or by e-mail, and I throw them in my current tax box. This time of year, when I get my year-end statements, I open each and either raise my hands and rejoice, or try not cry. Either way, it provides me with a snapshot of where I am at.
- Sit Down With Your Financial Advisor. Set up an appointment in person to sit down with them for at least an hour and review all of your year-end statements together and discuss any major changes you had in the prior year, and any major changes you anticipate in the coming year. Your financial advisor needs to be a TRUSTED advisor. Let me say that again, TRUSTED. Like your priest, pastor or minister...or even a great psychologist...this needs to be the person you really peel yourself like a grape with; their advice is only as good as the information you provide them about your spending, goals, income, etc. Be honest.
- Balance Your Checkbook(s). This seems like a no-brainer right? Wrong. You would be amazed by the people that do not EVER balance their checkbooks. Never. That is a receipe for disaster. I can prove it. Lets say you run a tight balance then you are just playing with fire tempting the overdraft police. You are asking for fees you can obviously ill afford. All banks today offer overdraft protection including using a credit card, line of credit, etc. to back-up your account. Do it, the interest on that is a lot cheaper than overdraft fees. If you have tons of money in the bank, you are losing money. How? Well if you have excess money sitting in a regular checking account, you are more than likely earning little to no interest on that money. These days there are tons of easy to sophisticated products out there that can help you earn more on your money in the short-term and the long-term. These aren't your grandmother's CDs anymore. Banks have to continue to do more and more to retain and earn an individual's banking business. Trust me, the right bank will work for your business. On the other side, show them some loyalty too when you find a good one.
- Relationship Banking. This is really getting into my bread and butter, but I am speaking to you now as a consumer. Spreading your banking acccounts and loans amongst different banks may seem smart in the short term as you are trying to get the lowest rate or the highest interest, but let me ask you to look at it a different way. How many banks are you having to drive to? How many different websites do you have to log into? Have passwords for? How many bankers do you have in your address book? How much TIME are you spending managing all of these banking relationships?? Think about it. Add it up. I promise you that if you would do an analysis of time, energy, stress, etc. and compared that to keeping it all with one trusted bank/banker, you would be blown away. Unless you are an extremely high risk customer, every bank in the Union (and overseas as well) is going to be scrambling for your business. Is having it all spread out really worth that 50 bps on a loan difference? Really? Now everyone's situation is different, but I would encourage you to take the time to really look at your situation. Simplicity. It is not a four letter word. If it is not simple, there is stress. Where there is stress...well, you see where I am going with this.
- Auto Debit/Bill Pay. Are you still writing checks? Why? Really....why? I write maybe ten checks a month and four of those are for my offering at church. I would highly encourage you to set up your bills on auto debit or utilize bill pay. The benefits aren't just in saving time and money, but also most companies will allow you to pick your due date. For example, I picked my due date with Entergy for my monthly electric bill. They e-mail me my statement each month. Entergy is the dream scenario really because they will even e-mail you your statement/bill every month. I wish I could get every bill via e-mail, but that day is coming sooner than you think. You don't want to EVER be late on a payment so why risk it, if it is automatically taken out on the same day every month, everyone is happy. Credit card companies are even easier to deal with because they will not only let you pick your due date, but you can set it up to pay the minimum balance each month, a higher set amount each month, or the balance in full each month. How great is that? Trust me, most companies are not trying to "get" you, and if you are dealing with one that makes you feel that way. Change. Competition is too fierce in the finance industry for you to deal with bad customer service.
- Get Debt Free. Stay That Way. I remember when people use to talk about this a few years ago and got lauged at. I mean debt was "good". Not anymore. If the last two years have taught us anything, it is that the days of trying to keep up with Joneses need to be over. We need to all be living within our means...at a minimum. The real goal needs to be living under our means and putting the difference in a savings account. We are really starting to see that happen. Talking about playing the Glad Game with a Recession. :)
- Save! If you have a 401K, maximize your contribution every year. Put a little away every pay period in a rainy day fund (or in my life it becomes the accident fund ~ I became quite "accident" prone in 2010). Contribute to an IRA and max it out annually. I prefer Roth IRAs, but that is just me. If you are my age, we have to take ownership of our retirement. Social Security ~ who knows. I get my statement every year (about this time), and I look at it...but honestly, I am not counting on it. Inheiritance. Well, if you are getting one, that is great for you. I'm not. The truth is that even if my parents did have it, I would want them to spend every dime before they go. They worked for that money, I didn't. Now I am not knocking it either way, but you have to be realistic on when and what you are going to get. I have had clients who said, "I don't need to save for retirement because I will be getting my parent's when they pass." Really? When do you think that is going to happen? With life spans ever increasing, your little nest egg may not get to you until long after YOU have or want to retire. Make your own plan. Look at anything else as gravy.
- Trust Yourself. Now I just smiled as I wrote that, but it is SO true. The worst spenders or savers I have ever known or worked with have always told me they knew what they were doing was wrong. You KNOW. Trust your inner voice that says I don't need to spend that, or I need to put more in my savings and drink less coffee at Starbucks. Be true to yourself, and I guarantee you will be surprised. I must do a slight digress here....we all have our own network of people we see and talk to everyday so that is the scope of what we know. I love hearing other's stories in this area because it teaches me things I just don't know because that is not in my realm of experiences. My latest favorite is one I heard the other day about someone that could not pay to repair their water system, but yet they have a state of the art satellite dish, four wheeler, and a new car. What are your priorities? All of those things are wonderful. Heck, I don't even have satellite..slightly jealous. Is that your priority though. If it is, go for it. If you are taking pause because hey, a bath sounds nice, then water might be the better choice for you. Take a look at your plan (if you don't have one - make one) and shift some items to get things more in line with your personal priorities for your life. Individuals, not just companies, need their own mission statement, vision and goals.
Well back to the grind. I hope these ideas help inspire you to create your own unique financial plan. I encourage you to try it. I was glad when I did, and I bet you would be too.
Sunshine Dreams to You ~ Today and Every Day! :)