FINANCIAL PLANNING RESOLUTIONS

The most popular New Years resolution is to go on a diet to reduce your weight. The second most popular resolution is to get organized financially. Here are some specific steps to take.

1. Do Estate Planning. At least have a current will to distribute your property after death. Better yet could be a revocable trust, pourover will, power of attorney for medical purposes, durable power of attorney and a living will stating your intentions as to life saving procedures.
2. Review your withholding allowances. You do not want a large tax bill next spring, but you also do not want to make an interest free loan to the federal and state government.
3. Shred unsolicited credit card invitations. Identity theft should be a major concern of yours. Make those papers which do have personal information about you unreadable and preferably not able to be put together again. Also remember to destroy all expired credit cards so the numbers and name are not readable. "Dumpster divers" can send the pieces to people that can recycle.
4. Close unneeded credit card accounts. This is a double-barreled piece of advice in that too many open lives of credit can actually hurt your credit evaluation even when there are few balances. The second concern is that you may have a sudden urge to start using that account even though your intent was to not use it again. A third concern is that someone else may obtain the number and use the account.
5. Review your credit report annually. You need to know what the credit bureaus are reporting and whether or not there are mistakes on your report. You may also be able to identify identity theft.
6. Be sure your heirs are properly identified. This means on insurance policies. IRAs 401Ks pension and profit showing plans. These type of documents override your will or trust documents.
7. Invest in tax advantaged plans. These plans, whether they are IRAs, 401Ks, educational IRA, or section 529 plans may offer tax deductions for principal, tax free accumulation of monies, and possible no tax liability on closing out the plan. Some plans have specific purposes, i.e. education; others are for general use. There is also a new IRA tax credit.
8. Draw up a budget (financial spending plan). To do any level of financial planning you need to review your spending habits. Several categories are acceptable such as house payments, home maintenance, household and food, outside meals and entertainment, auto, etc.
9. Set up a personal filing system. Use the same categories as you used in the previous step. Be sure to have categories for tax deductible items such as charity, medical, taxes, and business type deductions and items of income. As an aside, if you do not pay your bills the same day as they came in, a priority bill payment system can also be setup.
10. Find a safe place for important papers. This can be a bank safe deposit box or a fire resistant safe in your home. If the safe is mounted inside a wall or floor, it might also be a good place to hold some jewelry or valuables. Another idea is to provide us with copies of these key documents to keep in our permanent file.
11. Maintain adequate insurance. This means life, health, disability, long-term care, household and auto. These should all be reviewed on an annual basis with your insurance agent and with us as independent advisors.
12. Save More. Thought that I would never get to this one didn¹t you? In addition to the tax advantage plans referred to you above, you should have a systematic program for savings. You should have cash reserves or readily available funds to carry you for 3-6 months in case you have no income for any reason. If you have disability insurance, the amount needed should be coordinated with the policy and with other sources of income.
13. Track your investment performance. Review the status of your investments at least 3 to 4 times per year. Your primary goal should be to meet your long-term goals. Your investment advisor should have a plan to meet your goals and be willing to review the progress regularly. Naturally, you can not really expect to go against the market, so appropriate investment yardsticks should be used also. Evaluate your asset allocations also. Due to market conditions it may have become unbalanced.
14. It may be too late for some of you, but if possible, educate your children about financial affairs. It may be the only instruction in this field that they ever receive.
15. Be wary of scams. Always get the details in writing and run them by me or another trusted advisor before committing money. Tell the sales person you want your CPA to review the proposal, and if he tells you that the CPA does not understand it, run to the nearest exit.
16. Finally, wear your seat belt when driving. About 1 in 14 Arizona motorists will be involved in an auto accident in 2003.