~ 7 Financial Strategies to Lead Into a Successful 2010 ~
January always seems a bit like a Monday morning. Lots to do, and not nearly enough coffee. Pass the aspirin and start planning now.
- Assess the debt. If you personally did your part to single-handedly stimulate the economy over the holidays, we thank you. January is the time to assess all debt – credit cards, lines of credit, what you owe Mom and Dad, and car payments (I don’t count mortgage payments as debt, because you have to live somewhere, and if you weren’t paying a mortgage you’d be paying something for rent anyway.) Add it all up, and write that number on your calendar for Jan 1, 2010. As you pay off debt, track that number by adding up all debt at the beginning of every month, to make sure that debt number is heading in the right direction.
- Any Thing, just not Every Thing. The book Do It made a great point several years ago – you can have Any Thing you want, just not Every Thing you want. So prioritize your serious wants, and separate those from your more frivolous wants. If you want to take a vacation, make saving for that a priority. If you want to increase retirement savings, cut out something less important. It is all about making a clear decision and focusing on the end goal.
- Make a List and Check it Twice. I am the first to say that shopping with a list adds time. (I always forget something in the first aisle and have to double back somewhere at least twice.) However, whenever I take a trip, I make a list. When I go to a presentation, I make a list. For my financial goals, I make a list. Why? It increases the chance of getting it done if it is something I look at regularly. When making 2010 business goals, make a list. And before heading off to shop, make a list.
- Taxes, Taxes, Taxes. The tax bill is going to come as a surprise to a lot of people. The US deficit spending has to be funded from somewhere, so we are going to see personal income as well as corporate tax increase. If the deficit spending increased by 4 fold in 2009 alone, how much do we think our taxes are going to increase? (Hint: Probably more than what we’d like.) Hopefully taxes won’t multiply by 4 immediately, but we are naïve if we think we are not going to be impacted. Start planning for taxes early, and be prepared. You might need to get professional help.
- Pay to Pay? I know, it does seem wrong to pay a someone so that they can help you pay what you owe to the government. However, remember that a great tax person will generally 1) know the laws, 2) know the most recent changes, 3) actually save you time, effort and money in the long run. Don’t forget to take 2008 losses. Lot of folks are still reeling from the stock market melting, and many people sold at a loss. Remember that you can offset gains with losses for tax purposes. Again, seek a professional if it seems overwhelming.
- Get the family involved. Sit down and honestly discuss financial matters with the family. Make sure everyone (over a certain age, of course – an 8 year old doesn’t need to know what the utility bill is) understands that there are limited resources. A great technique is to give teens and tweens their own “living allowance” which includes what they need for lunches, entertainment, clothes and miscellaneous items. Start tweens off with a weekly living allowance, and teens for the month. It teaches them to budget, to allocate funds for what they want, and to be mindful of money. My friends did this with great success. The first month the teen ran out of lunch money on the 20th of the month. Mom directed the teenager toward the jar of peanut butter. Teen never had a budgeting problem again.
- Spend less than you make. If money gets tight, stop shopping. I was very impressed when a friend of mine told me a few weeks before Christmas that she just couldn’t do gifts this year because money was tight. Her friends were MORE than understanding, and a more than a few felt relieved because they were tight this Christmas too. Pressure off!
Happy New Year!