Financial Action Plan for January
January 14, 2009
Looking to start off the new year on the right foot financially? Here are a few suggestions from the FPA on some actions you can take this month to plan out your finances for the year.
Set your credit report dates. You are entitled to one free credit report a year from each of the three credit reporting agencies: Transamerica, Experian, and Equifax. Each year, you should check each of your credit reports from Annual Credit Report.
It’s wise to stagger the dates you check each report because irregularities might surface at different times of the year – just split them over the course of the year.
Think about college aid: On Jan. 1, kids and parents are free to start working on the Free Application for Federal Student Aid (FAFSA) for the upcoming school year (2008/09). To meet deadlines in most states, you should submit your FAFSA no later than March 1with Feb. 15 being the optimal date.
Start or review your emergency fund: Experts believe you should have 3-6 months worth of living expenses set aside. Set a fixed amount you’ll save each month toward that goal.
Check your investment accounts on your brokerage firm’s or mutual fund companies’ websites and print off the December 31 statements for the previous year. Review the earnings paid out to your account from interest, dividends, and both short-term and long-term capital gains (if you were lucky enough to have any gains in 2008!)
Review the capital gains and/or losses you realized from the sale of mutual funds, stocks, and/or bonds. Use this information to begin planning for your 2008 taxes.
Review checking account & credit card statements for the previous year and tally your spending/expenses into categories. Compare your cash outflow to your cash inflow for each month of the previous year.
Set target goals for spending in each category for the New Year based on your financial goals and values. If you want to make this process easier, consider using a personal finance program for your computer.
Analyze your flexible spending account. If you have a health savings account or a flexible spending plan through your employer before the end of the plan year, total the amount of expenses filed during the previous year and compare them to the total amount you contributed. Make sure you aren’t contributing more than you are being reimbursed, because these are “use it or lose it plans.”
Sound advice! One action item on my list is to find a new reward checking account. I’ve been using CheckingFinder.com, a search tool, which identifies credit unions and community banks paying up to 6%. Just type in your zip. My current bank barely pays 2% (used to pay almost 5%).
I also began using credit cards that offer cash back incentives (just make sure you pay your balance in full each cycle).
Ideally, I’d like to have 6 months emergency fund, on top of all the debt paid off, but until then, i can only hold about 3 months while i’m paying everything off.
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