Cleaning Tips for Your Financial House

Is your financial house in order? Take the time to spruce it up. Here is a Top Ten list to make the task orderly and worthwhile.

Establish a regular maintenance program, for your financial house.

 1.  Decide who’s number one. If you haven’t done so previously, set up a budget. Make “paying yourself first”–putting a set amount into your savings and investments every month–a priority. Analyze your current spending habits and plan ahead for large bills and expenses.

Consider a complete renovation. 

 2. Rebalance Your Portfolio. Is it time to rebalance your investment portfolio? You may be at a stage of life that requires different investment tactics. Or, with the onset of higher taxes, you may wish to reposition your portfolio for a more favorable tax stance.

Consider the following: For a taxpayer in the 31 percent bracket, a tax-free investment yielding 6 percent is producing the equivalent of a taxable 8.7 percent yield. When the taxpayer jumps to a 36 percent bracket, the equivalent taxable yield of the same investment is 9.4 percent. If he or she leaps even further into the 39.6 percent bracket, the equivalent taxable yield rises to 9.9 percent!

Refurnish your credit “room.”

 3.  Mortgage Refinancing. Look at refinancing your mortgage while mortgage rates remain low. There are many options from which to choose and there may be one that will put more money in your pocket now and save you interest payments in the long run. 

 4. Home Equity. A home equity line of credit offers a low rate and the interest may be tax deductible. You may not need it today, but you can tuck it in your back pocket should the need for it arise in the future.

 5. Credit Card Debt.  Transfer credit card balances to lower rate alternatives that have been appearing in abundance as banks and credit card companies seek out your business. Read all credit terms carefully, and remember that credit card finance charges are not tax deductible.  Your best move would be to pay off your credit card debt and use the money you save on finance charges to begin a regular investment program

Look at future housing needs.

 6. Retirement Plans.  What accommodations have you made for your retirement? One of the best investments in today’s changing world of taxes is the 401(k), which can provide you with current reduction of taxable income, an excellent savings plan and tax deferral on earnings. Many employers offer excellent 401(k) contribution matching plans to further enhance the value of this retirement funding vehicle.

Checking windows, doors, and the roof.

 7. Insurance coverages.  Review your life, automobile, homeowners, and disability coverages. The plan you established years ago may need updating to meet your current needs. There are many complex factors to review. You may analyze your liabilities: being hit by an uninsured motorist, someone falling on your sidewalk, falling off a ladder, or a storm destroying part of your house. Reviewing your coverage after a tragedy strikes is common for many, but disastrous. Do it now. You should consult your insurance professionals to confirm your interpretation of the language in the contract

 8. Safety deposit box. One of the better “investments” is a safety deposit box. What should you put in one? Imagine, for a moment, that your residence was completely destroyed and you lost everything. Important papers would immediately come to mind. Deeds, marriage certificates, passports, and other valuable items would be candidates for a safety deposit box. Some people include a videotape of their home–both inside and out–as well as their valuables. 

 9. Tidying up. Each of us has a spot where interesting items are stored: Old, unused credit cards, bank accounts under $10, or records that need updating or have outlived there usefulness. Close them out, cash them in, revamp them, or distribute them to the trash bin.

Dust off your tax records. 

10. Tax Records. Always keep a record of your tax returns and important checks or charge slips that you may need in the future. Even though you had another person prepare your return, they probably did not keep a copy in their file for you. Maintaining a good system for your records is important. 

It is always more relaxing to live in a clean and orderly home. By taking the ten steps above, your financial home will become an inviting, enjoyable corner of your life! 




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