Make 2010 your year for mastering finances and creating a prosperous foundation for the future.

Pay off debt with an interest rate above 10%. Credit cards, HELOCs with high rates, and any other personal consumer loans take a chunk out of your income each month. Call each account to negotiate better rates.  Pay off what you can; highest rate first.

Review your insurance. Call your insurance company when you encounter a life change such as a new job, new home, or an addition to the family.  Investigate deductibles and see if raising your amount might make sense this year.

Review your income taxes. Income fluctuations and family additions are a great time to review your withholding.  If you withhold too much, you’re losing money you could potentially gain in interest throughout the year.  If you withhold too little, you might end up having to pay taxes and penalties.

Start budgeting. Watch where you spend the most money and look for ways to save. Regular maintenance for car and home, grocery shopping for the week and planning ahead for trips will all minimize  the impulse spending we do for last minute repairs and fast food runs.
Save more - at least 10% of your income. Make a habit of allocating 10% of your income for savings and investments for retirement. You’ll be actively working towards a better financial future for yourself. If that’s too much, try increasing your current allocation by 3% and work your way up.

Calculate your net worth. Do a reality check to ensure you’re on the right track. Your net worth should be increasing each year, even if it’s just by a small amount. The exercise of calculating your net worth can be very valuable as well — people often discover accounts, investments, etc. that they have forgotten about, or need to update.

Start an emergency fund. If you don’t already have an emergency fund, start one today. Your emergency fund should have a minimum of 3 months worth of expenses. This is your money for a job loss, emergency repair, medical expense, etc.  Keep these funds in a money market account or other high interest account that’s easily accessible.

Reviewing and prioritizing your financial commitments is important now more than ever — especially if you’re in the market to purchase or refinance.  Call me today for a free credit analysis — and hit the ground running in 2010!

Related Articles: Winter 2010 Newsletter