How to meet your financial goals in 2009
When it comes to New Year's resolutions, Kathy Johnson of Sacramento, Calif. has two simple money-savers in mind: "to get out of debt and pay off all my credit cards."
Johnson, a single mother, said her debts have accelerated due to health issues, unexpected veterinary bills and mounting interest charges.
Many are facing similar situations this year, especially given the painful enormity of 2008's job and investment losses.
Here are tips from a financial adviser, a credit card expert and a Certified Public Accountant.
-- Gather the paper
January is the perfect post-holiday time to collect your wits and your paperwork. Gather up all your financial documents -- bills, credit card statements, insurance records -- and create a filing system by category.
"Keeping financial and family records in an organized manner can save you time, money and trouble in the event of an emergency," said David Colgren, spokesman for the California Society of CPAs.
He recommends storing crucial documents -- such as birth certificates, property deeds, insurance policies, wills and power of attorney authorizations -- in a safe, fireproof location, such as a safe deposit box. Keep copies in clearly marked files at home. And be sure your spouse, a close friend or family member and executor (if you have a will or trust) know where those documents are located.
Also, CPA Perry Ghilarducci, owner and president of Avaunt Ltd. in Sacramento, recommends that if you've changed your marital status, bought or sold property, or want to change beneficiaries on life insurance and retirement accounts, take time now to review those documents, particularly your will and estate plan.
-- 'Power' down on payments
To get a lid on debts, write down all your income and every expense, including credit card payments, dentist bills, car loans, cable TV, even the daily coffee-and-muffin habit.
Hal Young, a financial adviser with Brecek and Young Advisors Inc. in Folsom, Calif., says the key is to eliminate enough monthly expenses to come up with a so-called "power payment." Whether it's $20 a week or $300 a month, it becomes an addition to your regular minimum payment on at least one outstanding debt.
He recommends making a chart, similar to the system in "Debt-Free on Any Income," by co-authors Lyle and Tracy Shamo. List every creditor by interest rate, monthly payment and number of remaining payments.
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