Are you financially ready for the New Year? Hopefully you are, but ready or not it’s here. Let’s review a few savvy ideas to consider for improving your financial situation as we begin the first quarter of 2013.
• Pay off or at least start paying down credit card debt.
Now is the time to get serious about eliminating and/or reducing your credit debt. Analyze your monthly income situation and design a realistic budget to begin systematically reducing your debt. Start with the credit card charging the highest interest rate. Three easy ways to generate extra income: (a) Have a garage sale. Clean out the entire house of unneeded items. Even use “Craigslist” or “eBay” to sell your things. (b) Stop eating out for one entire month each quarter. Cookout at home and take your lunch to work during this 30 day period of time. And (c) re-negotiate your cable TV and/or cell phone contracts annually to eliminate waste. You’ll be surprised how much money you can save. Use extra money to pay down debt.
• Make saving for your retirement the #1 priority.
How much money will you need to retire comfortably? This amount will vary among individuals, but the rule of thumb is that it will take a sum of money equal to anywhere from 12 to 20 times your annual income depending on how much you are going to rely on Social Security benefits. Less than half of all working-age Americans have ever even tried to calculate the income they might need in retirement. This is frightening when you consider that many people working today will likely be alive for 30 years after they become eligible for Social Security. I have three significant suggestions:
(a) Max out contributions to your employer’s 401K and /or retirement program. At the very least contribute an amount equal to what your employer will match; gradually increase contributions when able.
(b) Open a Roth IRA and make the maximum annual contributions;
$5,500 for 2013 ($6,500 if you are older than 50 years of age) and
(c) Diversify your retirement funds among stocks, bonds, real estate annuities, and precious metals. Modify your asset allocations as you approach retirement. Finally……………..
• Prepare for the worst. As the old saying goes, you are either going to live, die, or become disabled. Most folks can handle living; it’s the disabled and dying part that can wreck your financial program. The statistics are alarming at the probability that one of these tragedies will strike you before age 65. If you have dependents, then you need to have adequate life and disability insurance. Both are usually provided by your employer, however, check to make sure that the coverage is appropriate for your situation. An up-dated valid will and power of attorney is not only imperative, but also an inexpensive way to preclude disaster.
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The One Minute Investor, 2nd Edition
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