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Thursday, January 13, 2011
It's That Time Again for New Year Re-resolutions!
Every New Year, millions of Americans resolve to improve their lives. Unfortunately, many of these New Year's resolutions will fall by the wayside and by mid-month, they will have been forgotten. For those vowing to get their finances in order, Eleanor Blayney, CFP, consumer advocate for Certified Financial Planner Board of Standards Inc., has a solution for making sure financial to-do lists get done in 2011: start over and keep it simple.
"The key to keeping financial New Year's resolutions is to apply the principle of 'little and often,'" said Blayney. "Grandiose goals need to be whittled down into goals with specific, actionable steps, and there must be a commitment to updating these new goals frequently." According to Blayney, the usual financial resolutions can be given new life as smaller and more attainable "Re-Solutions" for 2011. For example: • Live within your means: Turn this goal into a reachable action by committing to avoid all overdraft and late fees in 2011. Keeping monthly tabs on current account balances and credit card payment dates is an easy, simple way to avoid these fees. • Get out of debt: Breaking this goal into baby steps can change this resolution into a big financial stride forward. Start by paying off more than required on credit cards, auto loans and mortgage – even if it is only a few dollars. Use auto-pay systems to make regular extra payments, and increase the amount of the payments at regular intervals. Once the auto-transfers are set up, the goal will begin to take care of itself. • Save more: Here is another resolution that is best accomplished a bit at a time. For working Americans, there is no excuse for not having money to save this year, thanks to a recent tax change. Starting with the first paychecks in 2011, the amount of employee contribution to Social Security will go down by 2%, giving most individuals a slight increase in their take-home pay (at $50,000 annual gross wages, paid every two weeks, it will amount to about $38 per paycheck). Have this money automatically put into a money market account. After a year, the account will have accumulated around $1,000, which can be invested or used as an emergency fund. • Prepare a will: This is a perennial "must-do" for many New Year's resolvers, but one that is rarely kept. There seem to be so many "what ifs" that people often feel overwhelmed. By applying the "little and often" rule, this important task can be broken down and completed. First, understand that estate planning is a not a one-time event, but a lifelong process. Wills, trusts and beneficiary designations will need to be reviewed and adjusted to changing life circumstances every few years. Second, when creating an estate plan, forget about the "what ifs," and keep the focus narrow. The only question that needs to be answered is: "If I died today, how should my affairs be handled?" RISMEDIA