Saturday, January 1, 2011

New Year's Resolutions

I thought I'd share this article I found on MSN about financial New Year's resolutions:

5 financial New Year's resolutions

If you've made plans to eat right and exercise, be sure to add a couple of to-do's that will be sure to improve the health of your finances.

Lay a balanced investment groundwork
Made any New Year's resolutions yet? Focusing on the state of your financial health can pay big dividends down the road.

Resolve this year to lay the groundwork for a balanced investment portfolio. Ask yourself: Does my current asset allocation still match my risk tolerance and time horizon? Are changes in order?

The reason to undertake this exercise is simple: The stock market's gyrations over the past few years may have shifted the value of your stock holdings above or below their projected levels. If your portfolio has changed significantly, consider a rebalancing -- either by selling some of your stock or bond investments or by purchasing more stock, bond or cash investments.

Create a nest for the future
Rather than just hoping you'll have enough for a comfortable retirement, resolve to take time to calculate how much you'll need -- and how much you'll need to save.

Think through the "must-have" expenses, such as housing, and the "nice-to-have" expenses, like annual vacations to the tropics or a ski resort. Once you've figured out what your future liabilities could be, you can establish a realistic accumulation goal and ensure that you're on course to reach it.

If you don't know how much you are going to need to retire comfortably, how will you know how much to save?

Check your family's financial security system
Unforeseen calamity can rob you of your savings and investments if you don't have the right financial security system in place. Many Americans are underinsured, which is a shame because insurance can help protect you and your loved ones from the costs of accidents, illness, disability and death. It is an important part of any sound financial plan.

Your individual need for coverage will depend on your age, family and financial situation. Whatever your situation, resolve this year to make a checklist of the insurance you have -- and equally important, what you lack -- to determine how best to safeguard your family's financial future.

Preserve the assets you've accumulated
You may not enjoy thinking about what will happen after you're gone, but failing to plan could cost your family and loved ones. A sound estate plan can help preserve your assets and keep them from being unnecessarily reduced by taxes.

Studies show that more than half of Americans die without a will. If you don't have one, resolve this year to put together an estate plan that includes an up-to-date will, a power of attorney and a living will, and is capable of utilizing estate-planning tools regarding charitable giving and joint ownership of property.

Protect your financial foundation from the ravages of debt
While you're putting the rest of your financial plan in order, don't neglect credit-card balances or other outstanding debt. Consider ways to either reduce your debt or manage it better. For example, you might be able to save on interest charges by consolidating and transferring your credit-card balance or by refinancing your mortgage.

Your financial house is a complex structure that needs regular upkeep. By keeping it in order throughout the year, you'll be well on your way to reaching your goals.

As with any New Year's resolution, it's all about the follow-through. How many times have you had a great idea and a moment later you couldn't remember it? Try using some of the financial aggregation tools available for free at websites such as or

I don't know how much I'll use the things in this article. However, here are a few of my goals for 2011:

Pay down at least $10,000 on the 2nd mortgage
Fully fund my IRA ($5,000)
Start saving for a new-to-us car. It will probably be a few years before I get one, but it doesn't hurt to start saving now.

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