Last year I made a series of money resolutions for 2008 and I thought it would be fun (as well as a way to hold myself accountable) to review how I did. Here are the results:
Resolution: Increase net worth by at least 12.5%.
Result: Nope -- missed it by a mile.
Resolution: Check our credit reports for accuracy. Need to do at least once this year.
Result: Unfortunately, I missed 2008. I need to get on this.
Resolution: Check credit score.
Result: Did this as part of the process when we almost bought a house. Our score was great!
Resolution: Complete estate plan.
Result: Done.
Resolution: Complete 2007 tax return.
Result: Did it, though we had a snag along the way.
Resolution: Update my wife on our finances. I do an annual PowerPoint report each summer for her.
Result: Did it. (And she loved it!)
Resolution: Give a good percentage of gross salary as offerings (in addition to tithing).
Result: Completed. Here are some of the places I supported.
Resolution: Continue my major investments rebalancing.
Result: Did this in a MAJOR way ("thanks" to the dropping market) and focused on some low-cost funds that will help both my future returns and make tracking easier.
Resolution: Look for a new home.
Result: Did this -- and almost bought a new one.
Resolution: Earn additional income.
Result: I'm giving myself a partial accomplishment on this. I did earn extra income over and above my job, but it wasn't any more than the extra I earned in 2007.
Overall, I got most of the resolutions completed, but the big one (net worth) missed big-time. But I made some good moves and am hopefully now set up for a great 2009.
How about you? How did your 2008 money resolutions turn out?
The following is a guest post from Marotta Asset Management.
Every year many of us make New Year's resolutions and then can't follow through because we claim we're too busy. The most common priority--if another hour can be found in the day--is to spend more time with family and friends. The second one on the list is to find time for physical fitness. But given two extra hours, far too many of us just work that much longer on our backlog of pressing responsibilities.
This year, however, is different. Financial planning concerns very likely threaten to consume your life and ruin all your other New Year's resolutions. The tsunami of 2008 left your finances beached in a tree, and a plan to get back on track in order to meet your goals is imperative. You can't afford to spend time with family and friends and make it to the gym unless you have someone on your team watching out for your finances. Few of us are disciplined enough to accomplish what we need to do without help.
If you are young, you may not have had that much saved relative to your annual spending anyway. But if you are older than 40, what you save each year is small compared with what you already have invested. So growing that money is critical. And for both young and old alike, for every seven years you delay saving and investing, you cut in half the lifestyle you might enjoy in retirement.
Here are some suggestions. First, ask the right questions and stay the course until you've found the answers. Goals that are shared are ten times more likely to be acted on. Don't wait until you have everything set up to seek out accountability.
Second, make those goals concrete and then document them. Set your savings goals as a specific annual percentage of your adjusted gross income (AGI). We recommend saving at least 10% of your AGI in tax-free retirement accounts and another 5% toward retirement in taxable investments. If you are behind on your savings (over age 40 with less than five times your AGI in investments), you may want to save more in order to catch up.
Third, craft the best strategy to implement your goals, including prioritizing the appropriate retirement vehicles. We recommend investing just enough to get the entire match that your company's 401(k) plan offers first and then funding your Roth IRA accounts next. After these two, make certain you have enough nonretirement savings. By prioritizing your investment vehicles, you are deliberately putting your money into accounts that combine the greatest number of asset allocation choices with the lowest possible fees. Many company 401(k) accounts have such high fees and poor choices that they frustrate investors.
Fourth, automate your plan. Automating putting money in an employer-defined contribution plan is easy. Automating a taxable savings plan is just as painless. Most brokers offer an automatic money link between your investment account and your checking account. They also offer a monthly automatic transfer between the two accounts.
Finally, monitor your plan and rebalance your portfolio regularly. I recommend doing this halfway through the year after your June 30 statement.
Your plan must be comprehensive. Investment management may be at the core, but it is not the most critical element. Managing your investments must be done in the context of sound financial planning that you and an advisor monitor and review regularly. Financial planning includes retirement projections, figuring out how much to save and setting reasonable spending rates in retirement.
But an even more important element than financial planning is a comprehensive wealth management plan, which should include reasonable and appropriate insurance and liability coverage.
Perhaps the most critical component of wealth management in the new year will be tax management. With the potential for tax rates to fluctuate even more than the stock market, the value of tax management has never been greater. In addition to positioning your family's wealth to take advantage of all the possibilities, from Roth conversion to municipal bonds, you also will need help to contend with the plethora of changes in estate planning laws over the next few years.
Investment management, financial planning, wealth management and estate planning underline the need for integrated life planning. You can learn to enjoy life more, and find time for family and exercise, if you delegate the financial, tax and legal issues to trustworthy advisors.
The Money Blog Network is doing a group writing project where we're all giving an update on how our New Year's resolutions are going one month after we've made them. For your reference, here are my money resolutions for 2008. And here's my update:
1. Increase net worth by at least 12.5%. My savings is on automatic, so I've done well on this one for January. As far as where the market will end the year -- that one's out of my control but will have a HUGE impact on where my net worth ends in 2008.
2. Check our credit reports for accuracy. Haven't done so yet this year.
3. Check credit score. Haven't done so yet this year.
4. Complete estate plan. This is the one I've been working on in January. We've seen the first draft (after selecting and contacting potential guardians) and are close to being done.
5. Complete 2007 tax return. All the paperwork is in my file. I now just need to assemble it and send it to my CPA.
6. Update my wife on our finances. I plan to do this in July. It's our annual "tradition" to do it then. ;-)
7. Give a good percentage of gross salary as offerings (in addition to tithing). I donated some stock this past month, so I'm well ahead on this resolution.
8. Continue my major investments rebalancing. This is one reason I gave away stock instead of cash -- it's part of my rebalancing plan.
9. Look for a new home. No one looks at homes in January in Michigan. ;-)
10. Earn additional income. I made my list this month -- now I need to get going on it.
Overall, I think I'm off to a good start. How about you? How are your resolutions coming one month later?
Here's what some other members of the MBN are saying about their resolutions:
Here's an article from MSNBC that says many people are resolving to get their finances in order in 2008 -- even more than those who are resolving to get in shape:
Some 67 percent of the 1,002 adults surveyed nationwide said that becoming financially fit is a top New Year's resolution, while 57 percent are committed to becoming physically fit in 2008.
So two-thirds of Americans are pledging to get their finances in shape, huh? I think I'll believe it when I see it. ;-)
But for those who are serious about getting their finances in shape, here are a few posts to get you started in the right direction:
Here's a list of what I plan to accomplish in 2008 in the area of personal finances:
1. Increase net worth by at least 12.5% (this includes both saving and investing impacts.) We've been averaging over 16% for about 15 years now, but 12.5% has always been my goal. Maybe time to up this one, huh?
2. Check our credit reports for accuracy. Need to do at least once this year.
3. Check credit score. Something I've put off for too long.
4. Complete estate plan. Already started on this one -- have a lawyer and have selected guardians for our kids.
5. Complete 2007 tax return. An annual resolution, unfortunately.
6. Update my wife on our finances. I do an annual PowerPoint report each summer for her.
7. Give a good percentage of gross salary as offerings (in addition to tithing). I have an actual amount listed, but I'm leaving it off here. ;-)
8. Continue my major investments rebalancing. I will keep getting rid of old funds with high capital gains by donating them to charities while taking cash from income and replacing the amounts given with investment in index funds.
9. Look for a new home. Our search continues in earnest this year, so we may be moving in 2008 if we find the right place at the right price.
10. Earn additional income. Will try again to earn an extra $10k this year.
Money magazine lists the top money-related New Year's resolutions in its January issue. The magazine took a poll, and here are the percentages of people that claimed the various resolutions for this year:
The information also includes findings that 1 in 3 think they'll definitely achieve their top resolution but 51% think they may not have the money to make it happen.
I have no debt and my emergency fund is funded, but I'll fully fund my 401k again this year and I could buy some real estate (if we find the right house.) I'll share my specific resolutions later, but for now how about sharing yours? What do you resolve to do money-wise this year?
At the beginning of 2006, I committed to several money-related resolutions and promised to track my progress on Free Money Finance. Since my November update, I have invested in two 529 accounts (so take that one off the list) but didn't close the loop on updating our wills (though I have the name of a recommended lawyer and have contacted him.) So, technically, that's the only resolution I didn't hit this year. Not bad!
For 2007, I'm going to be doing something a bit different. I won't be stating my resolutions and then tracking them each month, but I will give a monthly update on my net worth status -- if it's up or down, why, what I'm doing to make it grow, etc. It seems like a more interesting topic to me and is exactly on target for what this blog is about (after all, my tagline is "grow your net worth".)
So to start out, let me detail where my net worth ended 2006. If anything, these numbers will be a bit low since I haven't yet received my final investment statements for the year, and I always have some capital gains from mutual funds. But they're close enough, so let's jump in.
The S&P 500 was up 1.26% in December, but I didn't do as well. I was flat (my net worth was up/down 0.00 % versus the previous month to be exact) due to the fact that I wanted to get in a big charitable contribution before the end of 2006 instead of letting it fall in January. So I made it and was flat as a result. That said, once the capital gains hit, I'll likely be up half a percent or so.
As for 2006, it was a good year. My net worth was up 18.2% -- a strong showing. That leaves me with a compounded annual growth rate of 16.5% since 1996 -- also not bad.
Who knows where 2007 will take me? I will keep saving, of course, but so much of my net worth is tied up in the stock market that I pretty much go as the market goes. If it's up, I'm up and if it's down so am I. Only time will tell which it will be.
I'm a bit behind posting this one, but there's so much good stuff tot talk about and only so many posts a day. ;-)
But here's a listing from Money magazine's January issue that lists the percent of people making financial resolutions who named each of the following as their top financial resolution for 2007:
So let me help those of you who may have made these sorts of resolutions -- by pointing you to some resources here at Free Money Finance that can help you keep them.
Saving more:
Paying down debt:
Making more income:
Spending less:
Investing more:
Here are some thoughts from the wonderful book The Bogleheads' Guide to Investing (I LOVED the book -- see my rating for details) on how to improve the odds you won't need to use insurance. It's also a great list for New Year's resolutions and also serves as a list of steps to take to live longer. Their thoughts:
Here's how I score on these:
1. Don't smoke.
2. Exercise at least four times a week.
3. Don't drink.
4. Always wear a seatbelt, and never drive under the influence.
5. I am the proper weight -- I'll be working on part 1 of this in 2007.
6. What was that? I missed it -- I was dozing off. ;-)
7. I get a physical and vision test once every two years (my doctors' preferences) and a dental check up twice a year.
8. I HAVE to have a positive attitude to do this blog, don't I? ;-)
Seriously, if you are missing any of these in your life, consider making them a resolution for this year. You'll feel better and live longer as a result. And, after all, life is more important than money.
At the beginning of the year I committed to several money-related resolutions and promised to track my progress on Free Money Finance. So far, I've posted updates at the end of every month (see New Year's Money Resolutions Update through October 2006 for last month's update.)
This is my update for the month ending November 2006.
I've completed most of my resolutions this year and a couple of the others happen automatically every month (see last month's link above for details/specifics), so I'm only going to address the remaining issues in this update.
Here are the ones I'm still working on/made progress on this month:
We're closing in on the end of the year and I've either completed every resolution or am closing in on them We'll see if I can get the last two done (I really have the college one done -- the resolution was to sort out the amount I needed to save) and make it 100% for 2006.
At the beginning of the year I committed to several money-related resolutions and promised to track my progress on Free Money Finance. So far, I've posted updates at the end of the following months:
This is my update for the month ending October 2006.
First, here's a list of the completed resolutions so far this year:
Here are the ones I'm still working on/made progress on this month:
We're closing in on the end of the year and I have only one resolution left -- updating our wills. We'll see if I can get that one done and make it 100% for 2006.
At the beginning of the year I committed to several money-related resolutions and promised to track my progress on Free Money Finance. So far, I've posted updates at the end of the following months:
This is my update for the month ending September 2006.
First, here's a list of the completed resolutions so far this year:
Here are the ones I'm still working on/made progress on this month:
I'll be reporting on my status with these at the end of every month, so stay tuned to see how I do.
At the beginning of the year I committed to several money-related resolutions:
and promised to track my progress on Free Money Finance. So far, I've posted updates at the end of the following months:
This is my update for the month ending August 2006.
I'm going to change the format a bit because I'm starting to get several resolutions completed. So I'll now list all the completed resolutions first, then give an update on ones I'm still working on.
Let's get started. Here's my August update.
Resolutions completed so far this year:
Here are the ones I'm still working on/made progress on this month:
I'll be reporting on my status with these at the end of every month, so stay tuned to see how I do.
At the beginning of the year I committed to several money-related resolutions and promised to track my progress on Free Money Finance. So far, I've posted updates at the end of the following months:
This is my update for the month ending July 2006.
Since I have several resolutions, not every one will need action every month. However, I plan to mention each one every month just to remind myself and all of you what I'm planning to accomplish this year.
Let's get started. Here's my July update:
I'll be reporting on my status with these at the end of every month, so stay tuned to see how I do.
At the beginning of the year I committed to several money-related resolutions and promised to track my progress on Free Money Finance. So far, I've posted updates at the end of the following months:
This is my update for the month ending June 2006.
Since I have several resolutions, not every one will need action every month. However, I plan to mention each one every month just to remind myself and all of you what I'm planning to accomplish this year.
Let's get started. Here's my June update:
I'll be reporting on my status with these at the end of every month, so stay tuned to see how I do.
At the beginning of the year I committed to several money-related resolutions and promised to track my progress on Free Money Finance. So far, I've posted updates at the end of the following months:
This is my update for the month ending May 2006.
Since I have several resolutions, not every one will need action every month. However, I plan to mention each one every month just to remind myself and all of you what I'm planning to accomplish this year.
Let's get started. Here's my May update:
The S&P 500 was up 1.6% five days into May, and I thought I was going to have a banner month. Then the bottom fell out. From its high on May 5, the index lost 5.2% before rebounding to "only" being down 2.7% for the month. Since the majority of my net worth is in the stock market, I went along for the ride. My net worth was down 1.93% for the month. I'm now up only 3.69% for the year and on track to be up 8.8% this year. That's not terrible, but it's a far cry from the 17.3% increase for the year I was looking at on May 1.
I'll be reporting on my status with these at the end of every month, so stay tuned to see how I do.
At the beginning of the year I committed to several money-related resolutions and promised to track my progress on Free Money Finance. So far, I've posted updates at the end of the following months:
This is my update for the month ending March 2006.
Since I have several resolutions, not every one will need action every month. However, I plan to mention each one every month just to remind myself and all of you what I'm planning to accomplish this year.
Let's get started. Here's my March update:
I'll be reporting on my status with these at the end of every month, so stay tuned to see how I do. However, I will be moving to an abbreviated version of this post -- one that focuses on my commentary more than anything else.
At the beginning of the year I committed to several money-related resolutions and promised to track my progress on Free Money Finance. So far, I've posted updates at the end of the following months:
This is my update for the month ending February 2006.
Since I have several resolutions, not every one will need action every month. However, I plan to mention each one every month just to remind myself and all of you what I'm planning to accomplish this year.
Let's get started. Here's my February update:
I'll be reporting on my status with these at the end of every month, so stay tuned to see how I do.
If you're a regular reader of this blog, you know that at the beginning of last month I committed to several money-related resolutions and promised to track my progress on Free Money Finance. This is my first update in the series.
Since I have several resolutions, not every one will need action every month. However, I plan to mention each one every month just to remind myself and all of you what I'm planning to accomplish this year.
Let's get started. Here's my January update:
This puts me on the high end of the goals I set for this year, but in many ways January was a particularly good month. We'll have to see if it holds up in February.
I'll be reporting on my status with these at the end of every month, so stay tuned to see how I do.
Though it's a bit past time to make New Year's resolutions, I still wanted to share this piece that's courtesy of ARA Content:
Every New Year's Day millions of Americans make resolutions to be more responsible about eating, exercising, smoking, etc. With the average per person credit card debt in America at $8,562 and total consumer debt topping $1.7 trillion, this New Year consider committing to financial resolutions by creating a "Declaration of Personal Financial Independence."
"Many people struggle with living paycheck to paycheck and getting further into debt each month," says James E. Stowers, author of "Yes, You Can … Achieve Financial Independence" and founder of American Century Investments. "The new year is a time to take a long look at how you're spending your time and money, and determine your financial priorities. Creating and signing your own 'Declaration of Personal Financial Independence' is a great way to put those New Year's resolutions into practice."
Stowers recommends the following six resolutions to help you become financially independent:
1. Determine To Make a Commitment
Ask yourself this question, "Who will take care of me financially, if I don't take care of myself?" Your answer to that question will determine your financial future. Are you expecting to have enough in your savings to be independent until the end of your life? Or are you expecting to be taken care of by the government, a relative or a charity? Can you count on one of them to be there for you when you retire? The best option is independence.
2. Identify Your Wants vs. Needs
Most of us have more wants than we have income. By assessing your wants and needs, you can budget for everyday occurrences and save for the most important "wants" on your list. Conduct a thorough analysis of your needs so you know your monthly budget, and then prioritize your wants by what value they bring to you. You may be surprised by the items that fall to the bottom of your list.
3. Pay Yourself First, Then Forget About It
Before you pay a single monthly bill, including your mortgage, rent or insurance, pay yourself first. A simple rule of thumb is to have at least 10 percent of your gross income saved and invested for the long term. Then, fight the temptation to spend any of your savings. Time is your greatest asset, so the sooner you start saving and the longer you keep your savings in place, the more financially secure you'll be in retirement.
4. Practice Responsible Credit Card Use
Change your view on your credit cards and you'll become a responsible user. Credit cards provide the convenience of not carrying cash in your wallet at all times. They shouldn't be used to buy now and pay much more and much later. Start imagining cash coming directly out of your pocket and concentrate on paying down the debt that keeps you a prisoner of your credit card balances.
5. Prepare for a Financial Emergency
Personal, property or business risks will be a reality for all of us at some time. If you don't provide for your emergencies, who will? Life is full of risks and financial pitfalls. By preparing for those risks now, you ensure the emergency does not have a profound impact on your lifestyle and financial goals. First, assess your current personal level of insurance coverage, evaluating its ability to cover your assets while allowing you to pay higher deductibles. Then, build an emergency reserve fund based on three to six months of living expenses. The reserve fund should remain readily available, safe and income-producing.
6. Get Your Money's Worth
For at least one month, keep a record of every purchase, listing exactly the item and the cost. At the end of the month review the list and ask yourself these two questions:
If you answer no to either of these two questions, it's time to reassess your spending and saving habits. Your goal is to continuously refine the way you spend money until you are completely comfortable with your habits.
Stowers encourages each of us to create and sign a "Declaration of Personal Financial Independence" this New Year's Day.
"You cannot accomplish your goal of achieving financial independence by wishing. It takes doing. It takes being committed, and signing a 'Declaration of Personal Financial Independence' shows that you are absolutely determined to act," says Stowers.
"Yes, You Can . . . Achieve Financial Independence" is available by calling (800) 234-3445 or online at www.stowers-innovations.com.
Stay tuned to Free Money Finance for my resolution update. Towards the beginning of February, I'll let you know how I'm doing with the money resolutions I committed to this year.
Here's part 5 of a piece from Bankrate listing ten things to stop doing in 2006:
9. Stop the status quo. Find your way around the obstacles that are keeping you from your goals.
10. Stop missing out on smelling the roses.
I hope none of you out there are so paralyzed by having to make an investment decision that you aren't doing anything, but if you are, check out Getting Rich is Simpler than You Think and all the associated links. It should lead you in the right direction.
And I'm in total agreement with the idea of taking time to smell the roses. Especially since I'm a rose grower myself. ;-)
Free Money Finance recommends Emigrant Direct.
Here's part 4 of a piece from Bankrate listing ten things to stop doing in 2006:
7. Stop identity theft.
8. Stop phishing.
Identity theft is a topic that (unfortunately) will continue to be in the financial news for quite some time. Here are some of my posts on the topic that will help you combat this evil:
Click here to read part 5 of this series.
Free Money Finance recommends Emigrant Direct.
Here's part 3 of a piece from Bankrate listing ten things to stop doing in 2006:
5. Stop counting on Social Security.
6. Stop leaving checks in your mailbox.
My thoughts:
1. I'm counting on NOTHING from Social Security. If I get $1, that will be $1 more than I expect.
2. We still leave checks in our mailbox, but we don't put up our red flag. We get mail every day anyway, so the mailman already stops at our box -- no need for the flag.
3. For more information on saving for retirement, see these links:
Well, everyone else has offered their money resolutions for the new year, now it's USA Today's turn. Here are the highlights along with links to related posts I've written:
1. Save more for retirement.
For more information see:
2. Keep up on your federal benefits.
3. Save energy.
For more information see:
4. Beware the AMT.
For more information see:
Here's a resolution-related article from Dallas/Ft. Worth Texas fee-only financial planner Steve Blankenship titled Seven Steps to Start 2006 on the Right Financial Foot. I'm posting a summary as well as links to posts written on corresponding topics so you can get additional information/ideas:
Tip #1. Get Energy Efficient. See: Energy Savings Tips from Energy Star
Tip #2. Rebalance your Investment Portfolio. See: Reviewing and Rebalancing Your Portfolio, Time to Rebalance Your 401(k)
Tip #3. Increase your Retirement Plan Contributions. See: 10 Tips to a Prosperous Retirement
Tip #4. Conduct a Review of your Property and Casualty Insurance with your Agent or Insurance Company. See: Buying Term Life Insurance
Tip #5. Watch out for Diversification. See: Diversification is for Amateurs
Tip #6. Have your Estate Documents Reviewed. See: Benefits of a Will
Tip #7. Develop a Spending Plan. See: Three Ways to Track Your Spending
Here's part 2 of a piece from Bankrate listing ten things to stop doing in 2006:
3. Stop running up credit card balances.
4. Stop using variable rate debt.
I'm going to combine my comments into one on this set: Get out of debt. Credit card debt for sure, but all debt if you can afford it.
I know there are those who argue that mortgage debt is fine as long as it's managed, but my personal point of view, and what I've seen work in my life, is to have no debt at all -- mortgage or otherwise. Once you get to that point, you can significantly grow your net worth. Of course the keys to eliminating a mortgage require that you buy a house you can afford (for more on this topic, also see More on Buying a House You Can Easily Afford and Comments: Buy a House You Can Afford) and then sacrifice spending on other items for several years until you get it paid off. Most people don't want to do this.
Here are some posts on credit cards and debt that might help you get/stay out of debt:
Click here to read part 3 of this series.
Free Money Finance recommends Emigrant Direct.
Here's a great twist on the resolution theme from Bankrate. It lists ten things to stop doing in 2006. I'll cover a couple suggestions at a time to minimize length of the post and allow me a chance to comment. Here's part 1:
1. Stop spending more than you make.
2. Stop living paycheck to paycheck.
My thoughts:
1. Spending less than you make is not only a good tip, it's the single-most effective way to grow your net worth. Without doing this, you can't put money into a 401k, invest in the market, or do any of the other things that will benefit you financially.
For more on this topic, see these posts:
2. An emergency fund is vital to keep you from going into debt (or going further into debt) when an unplanned financial need arises. I just had one last night -- a pipe connection to one of our sinks gave out and spewed water all over the place. Thanks to my emergency fund, I was able to get a plumber to fix it without going into debt.
This is also the reason I regularly recommend Emigrant Direct. It's an excellent place to park your money and earn a good bit of interest (comparatively) while it's waiting to be used.
What would Free Money Finance be without Suze Orman contributing to our resolution-o-rama here? Not nearly as exciting a place to be -- I'm sure of that!
So without further ado, here are Suze's ten tips for a prosperous 2006 (with posts from Free Money Finance added as appropriate):
1. Play the Match Game. FMF: How Much Goes in the 401k?
2. Limit Your Company's Stock in Your 401(k).
3. Go for a Roth IRA. FMF: Tough Financial Choices, Part 2: 401k versus Roth IRA
4. Dump Expensive Funds. FMF: Getting Rich is Simpler than You Think
5. Protect Your Home. FMF: Suze Orman on Home Insurance
6. Get UnARMed.
7. Dump 'Universal Default' Credit Cards. FMF: Four Credit Card Traps, Escape the Credit Card Trap
8. Watch Your Identity. FMF: Financial Resolutions for 2006: Credit Check-ups, Identity Theft is Worse than You Think It Is
9. Insure Your Family's Well-Being. FMF: Insuring Your Spouse
10. Values Are Your Ticket to True Prosperity. FMF: Making the Most of Your Time
The resolution posts keep coming...and coming...and coming. For some of the past ones, see these links:
Here's Money Magazine's financial resolution suggestions:
1) Get out of debt.
2) Stash the Cash.
3) Don't wait! Consolidate.
4) Beef up your 401(k).
5) Reevaluate your insurance.
All good tips. As I've noted, these resolution articles tend to focus on simple and basic money suggestions -- some of the best ideas out there for growing your net worth.
I've written on these topics as well, so if you need more information, you may be interested in these:
More resolutions!!!!! Have you set yours yet? Here are resolutions for 2006 as suggested by USA Today (followed by some on my posts dealing with each suggestion, where appropriate):
I haven't written on the last one yet. Maybe this year. ;-)
Well, we're now into the new year, but as long as I keep finding good resolution material to post on, I'm going to keep it coming. It's pretty basic stuff, which is often the best financial advice there is.
Here's Money Central's 10 resolutions to fix your financial life (after each of their suggestions, I've listed free Money Finance articles that give additional information/perspective on that resolution):
Resolution No. 1: Set up a system. See Three Ways to Track Your Spending.
Resolution No. 2: Bank online. See Online Banking is Still Safe.
Resolution No. 3: Track everything financial online.
Resolution No. 4: Get out of debt. See Get Out of Debt, Part 1.
Resolution No. 5: Create a budget. See Why do Millionaires have Budgets?
Resolution No. 6: Review your 401(k) plan. See How Much Goes in the 401k?
Resolution No. 7: Check your insurance coverage. Find out if you have too little or too much. See Insurance: What You Need and What You Don't, How to Avoid Skimping and Overspending on Your Policy.
Resolution No. 8: Check your estate plan. See Benefits of a Will.
Resolution No. 9: Make new goals. See my New Year's Money Resolutions Summary.
Resolution No. 10: Create a contact list.
Here's an article from Marketwatch that discusses some financial goals we all should consider for 2006. There's lots of fluff in here too, so I'll just give you the good stuff:
My thoughts:
1. Good advice on saving the pay raise. Here's that source of savings that many people claim they "just don't have."
2. If you don't have the proper insurance, get it -- at least to cover disasters like a fire, death, or disability.
3. You know how much I like saving money. I have tons of ideas (and more to come) in the "saving money" category of this blog. Check it out.
4. I also post a lot about giving. See the "giving" category for a list of posts.
5. Yes, many things are more important than money, and time with your family is one of them. Be sure to make an investment in this area in 2006.
For those of you who haven't noticed, I've been posting my New Year's Financial Resolutions at Free Money Finance. Here's a listing of what I'm committing to for 2006:
I'll be reporting on my status with these at the end of every month, so stay tuned to see how I do.
For years I've been meaning to do this and haven't done so yet. So I'm making it a resolution here and with you all keeping me committed, I will do it this year!! The task? I need to create an insurance inventory of my house.
What is this you may ask? It's simply a listing of all the property in (and including) your house. It is to be used in case of damage or destruction of that property (like a fire, tornado, etc.) to show the insurance company what you owned so you can get everything replaced to the fullest extent of your policy. If you don't have one of these, you're relying on: 1) your memory -- and you will forget things, even significant things, and 2) the good graces of the insurance company to fully reimburse you.
Wait! Did I say "good graces", "insurance company", and "fully reimburse" in the same sentence? :-) I think you know what I mean.
You can create a home insurance inventory on paper, list it on your computer, take pictures, take video or use any of the aforementioned options in combination. If you really want to go hog wild, you'd make copies of receipts for your most expensive items as well. Finally, you need to keep your list/pics/video and any receipts in a place other than your home -- like in a safe deposit box -- for safe-keeping and to have in case anything happens to your home. (That's the whole point of the list, isn't it?)
Personally, I plan to use video. If a picture is worth a thousand words, 10 minutes of tape should be worth at least the replacement of everything I own.
I've already listed all my financial goals for 2006 and now that I've reported my blog stats for 2005, it's time to set blog goals (and the finances that go along with them) for 2006.
It's hard to predict what blog traffic, pageviews, and the like will be given that this blog is still relatively new (as is blogging as a whole), so I'm going to estimate low, medium, and high goals for 2006. The low numbers will be the lowest I can realistic see this blog generating, the medium goals will be what I'd most likely expect to happen, and the high being goals will be ones that currently seem to be the outer limits of what I can reach. Here are my estimates for each scenario along with the assumptions listed:
Low Estimate
Medium Estimate
High Estimate
Just as a reminder, all the revenue from this blog goes to charity.
I'll be updating my results monthly, so stay tuned to see how I do.
As you all know, I've been posting my 2006 financial resolutions here Free Money Finance, but I'm not the only one doing that from around the blogosphere.
Here are a few others you should check out:
Here's a piece I wrote three years ago for a national magazine. I thought it might give you some ideas as you work on your financial resolutions this year.
Where appropriate, I've added in links to other posts on Free Money Finance to provide more information on the topics. Here goes:
Every New Year, millions of people resolve to better their lives. Many pledge to significantly improve their finances. As with other popular resolutions such as stopping smoking or losing weight, the key is to have a plan and stick to it. Try these simple steps to get in shape financially:
Create a spending plan — Determine your income and expenses for each month by reviewing your checkbook, bank statements, and receipts for the last year. Also, track your cash spending for 30 days, adding expenditures to the proper expense category. Record actual results regularly and update your plan quarterly. This will reveal where your money is being spent and provide information you need to manage it correctly.
For more information:
Spend less — Spending less is easier than earning more, so look for opportunities to save money. Clip coupons, buy off-season, avoid impulse buying, and stop “cruising the mall.” Stop the small “leaks” of money; saving $2 a day on snack breaks at work yields $500 a year.
For more information:
Create an emergency fund — Emergencies arise. Cars break down, ankles are sprained, and jobs are lost. Experts suggest you set aside three to six months of living expenses as a regular reserve. This fund will cover those inevitable, unexpected costs and keep you from borrowing money when they occur. This is why I recommend Emigrant Direct. If you don't have a savings account set up with them yet, now's the time to set one up.
For more information:
Eliminate debt — Paying off a credit card charging 17 percent annual interest is equivalent to investing money with a before-tax, guaranteed return of almost 20 percent. More than half of Americans have $7,000 or more of revolving credit card debt. Eliminating this debt saves more than $1,000 per year.
Financial expert Dave Ramsey recommends a “debt snowball”—reallocating payments from retired debts to existing loans until all debts are consumed.
For more information:
Start saving now — Saving early for long-term expenses such as retirement or college allows you to capitalize on the most important investing force: time.
Multiply your efforts by using employer and government sponsored vehicles such as a 401k, IRA, and education IRAs.
For more information:
Get a will — A will can ensure your assets will be divided according to your wishes, save thousands in taxes, and allow parents to designate their children’s caregivers. A simple will usually costs less than $200 and can be modified as your life changes. A “simple” will can be complicated for the average person and a do-it-yourself kit is not a bargain if something’s missing. Use a lawyer instead.
For more information:
Give — Try to contribute something from each paycheck to your local church or charity. Remember, you’re rich compared to most of the world. Besides, giving helps focus on others and keeps finances in perspective—not letting them become an all-consuming part of our lives. Helping others meet their daily needs is a feeling no money can buy.
For more information:
Start working today on these suggestions, and within a year you’ll be well on your way to achieving the financial fitness you’ve always desired.
Here's part 10 of a series from Money magazine that lists their 10 New Years Money Resolutions:
Resolution 10: Craft a long-term plan
You've set the perfect investment plan in motion. But over time, as markets rise and fall, that ideal allocation will get out of whack. The solution: Get back on course by periodically selling some winning investments and buying more of your laggards.
1. Make it routine.
2. Get a before and after shot.
3. Fix your mix.
My thoughts:
1. I need to look at rebalancing my portfolio when I evaluate my investments this year. I haven't done it for awhile.
2. It will help that I'm going to be reducing my number of holdings this year.
3. For more investment-related posts, see these links:
Here's part 9 of a series from Money magazine that lists their 10 New Years Money Resolutions:
Resolution 9: Cut your taxes
Americans routinely let many valuable tax breaks go unclaimed. For instance, a 2002 government study found that up to 2.2 million taxpayers overpaid, by an average of $438, because they claimed the standard deduction instead of itemizing.
Here's how to hold on to what's yours.
1. Invest in an accordion file.
2. Take the write-offs.
3. Maximize pretax savings.
1. We keep a file for all our tax-related receipts each year. We drop receipts in the folder throughout the year and when we get ready to do our taxes, everything's ready. It's a great system.
2. I use a CPA to do my taxes. It's worth the expense in the time it saves me. Not to mention the headache.
3. As I've mentioned before, I fully fund my 401k. It gives me the maximum tax advantages this year and builds lots of (really good) savings for the future.
4. Here are some more posts I've written on the subject of taxes:
Here's part 8 of a series from Money magazine that lists their 10 New Years Money Resolutions:
Resolution 8: Get healthy
These days the classic New Year's get-healthy resolution -- shed those extra 10 pounds, kick the nicotine habit, dust off the old gym membership card -- has been joined by a new one: Lower those out-of-pocket health-care costs.
In this case, one action plan will help you reach both goals, since adopting healthier habits throughout the year should automatically trim your medical bills as well.
1. Take small steps (But lots of them).
2. Get free help.
3. Reap the rewards.
My thoughts:
1. What a great deal -- get healthier AND save money! Save on coffee costs, cigarette expenses, insurance premiums and more!
2. I started bike riding a couple years ago and really committed to it last year (I rode over 4,300 miles from December 2004 through October 2005 -- but I started training for the season way, way too early). This year, I'm working more on cross-training during the off season and will get back on the bike in March. It's a great way to stay in shape and have lots of fun (I ride 100-mile events with a team of riders. We raised almost $50,000 for charity last year.)
3. Here are some more Free Money Finance articles related to this topic:
Here's part 7 of a series from Money magazine that lists their 10 New Years Money Resolutions:
Resolution 7: Free up more time
Making time for yourself and your family is the top goal for 2006, according to a MONEY poll. Lack of time is really two problems: You probably are too busy, and you aren't making the best use of the spare time you have. The action plan below will help you address both.
1. Outsource a task (or two or three).
2. Automate bill paying.
3. Take a vacation.
4. Relax, really.
My thoughts:
1. I've written a bit about the value of time. You can see these posts at the following links:
2. We have four vacations built into our calendar every year: three visits to family around the U.S. and one visit from my parents. We've done this every year for several years, so it's a built-in time of "relaxation" (if you can call them that). ;-)
3. In addition, this year we want to take a special vacation with our kids. Since we live only a few hours from Chicago, we've thought about a vacation there to see all the museums, the aquarium, etc. My wife and I did that alone a few years ago and really enjoyed it. I think our kids would love it.
4. I also plan to ride in a few (2-3) centuries (100 miles on a bike) this year, so these will be mini-vacations for me.
Here's part 6 of a series from Money magazine that lists their 10 New Years Money Resolutions:
Resolution 6: Protect your family
There's a simple reason that 55% of Americans don't have a will: "It's difficult to talk about death and money," says Colleen Barney, author of Best Intentions: Ensuring That Your Estate Plan Delivers Both Wealth and Wisdom. And it's even harder to make emotional choices about, say, who will raise your kids. But ignoring the topic could one day leave those tough decisions in the hands of a probate court judge. Try reducing the tension in the situation with a highly pragmatic approach.
1. Start the conversation.
2. Choose a guardian.
3. Make it public.
4. Write the will.
My thoughts:1. As I've posted previously, updating my will is one of my resolutions for 2006.
2. Also see Benefits of a Will from Free Money Finance.
Here's part 5 of a series from Money magazine that lists their 10 New Years Money Resolutions:
Resolution 5: Spring for a splurge
Everyone deserves an occasional indulgence. What's more, says April Benson, a psychologist who specializes in compulsive shoppers, "if you deprive yourself too much, you're set up for future binges." In other words, rewarding yourself with a planned purchase now helps stop you from blowing your budget with impulse buys later.
1. Pick the prize.
2. Make it real.
3. Create your game plan.
4. Stay on track.
5. Buy it.
My thoughts:
I'm more of the "buck up" sort of guy, so this isn't my favorite resolution, but I understand how those with money challenges need this. Just don't let it get out of control. I have a family member who makes a habit of rewarding herself and never makes any progress financially as a result. Too much of a good thing is not good for your finances.
That said, saving up for a special purchase is a good idea. We just did this and went to the Great Wolf Lodge. It wasn't money-related (it was a reward to our kids for doing well in school), but it could have been. Anyway, since we'd been there before, our kids were highly motivated to do well and they did everything they could to earn the trip. ;-)