Keep Your Financial Resolutions This Year
Paying off debt and saving money are among the most popular New Year’s
resolutions, and the Iowa Society of Certified Public Accountants has some
helpful tips for those who want to meet to meet their financial objectives
in the coming months.
Have a plan
People often to fail to keep their new year’s resolutions because they don’t
plan out the steps they need to take to succeed. It’s difficult to reach
your goals if they aren’t clearly defined. Take the time to list your
financial resolutions and be as specific as possible about what they are and
how they can be achieved.
Pay off debts
When you make your resolutions list, CPAs advise that lowering your
outstanding credit card debt should be a top priority. Credit cards
typically carry high interest rates that drain cash that you could be using
for more worthwhile purposes. To reduce your debt, resolve to cut back on
other expenditures so that you can use these funds for credit card bill
payments. Also, consider ways to lower the interest rates you are paying.
Call your credit card company and see if you can negotiate a better rate. If
that doesn’t work, transfer your balance to a credit card with a lower rate.
Web sites like www.bankrate.com
and www.creditratings.com
offer advice on the best cards for many different situations.
Taking out a home equity loan is another option, since they carry lower
interest rates than charge cards do and the interest is usually deductible
for loans up to $100,000. Finally, if you have money in a savings account or
certificate of deposit that is earning very low interest, it might be a good
idea to use those funds to pay off debt. You will be saving more on interest
payments than you earned on the savings account.
Start saving
As soon as you have reduced your high-rate debt, start adding to your
savings, particularly your retirement account. The money you set aside can
be earning interest or stock market returns that will come in handy later.
Traditional individual retirement accounts or Roth IRAs also offer
worthwhile tax advantages, CPAs advise. And this step is easy if you arrange
for automatic payments made to a savings or retirement account from your
checking account.
Make the most of your investments
It’s a good idea to review all your investments every six months to be sure
they are still meeting your financial planning needs. If interest rates have
risen recently, for example, you may find certificates of deposit or other
safe, short-term investments that will pay more interest than your savings
account. Review your stocks and mutual funds, too, to see if they are
performing as expected or if another investment would provide a better
return.
Keep great records
You can’t make good financial decisions without the right information, so
it’s important to maintain and update documentation on your major accounts
and transactions. Set aside a file box and add important paperwork, such as
your property tax bills, mortgage interest statements, and receipts for
donations to charity. And remember that your CPA can help you with your
financial decision-making. Consult him or her on the best ways to keep all
your financial resolutions.
Access “Find a CPA.”
