If your New Year's resolutions didn't make it past the first quarter of 2005, don't despair. Launch a spring makeover of your finances, based on practical ideas with sound solutions.
- Revitalize your saving efforts. Amongst industrialized countries, Americans have one of the most dismal savings records of any nation. If money burns a hole in your pocket, remove some of the temptation by signing up for (or increasing your contributions to) an automatic savings program. Apart from 401(k) plans and IRAs, you can find mutual funds that will allow you to authorize automatic monthly payments into the fund of your choice from your checking or savings account.
- The recent debates over the future of Social Security should have impressed upon you the real importance of saving for retirement--now. Consult your professional tax advisor to make sure you are leveraging the tax breaks available to you. In 2005, people under age 50 may contribute $14,000.00 to their 401(k) (an increase from 2004's $13,000.00) or $18,000.00 for those in the 50 plus age bracket (up from $16,000.00). IRA limits have increased too, from $3,000.00 to $4,000.00 with catch-up contributions of $500 permitted for people over 50 years of age who qualify. Your tax professional can provide additional information.
- Divert any upcoming monthly pay increases or annual bonuses (or a significant percentage of them) directly into your savings account. If the increase is to your monthly pay packet, bump up your automatic contributions to your savings account(s).
- If a busy travel schedule, or hectic workload, makes timely bill paying difficult, consider electronic payments. If you are paying late fees or higher interest rates because you're not paying your bills on time, online payments could be your answer. You can schedule automatic payments or review and authorize each bill online. Online banking saves time and money.
- Check your credit report periodically to make sure it is accurate. A good credit rating helps you get the best possible interest rates for a mortgage, car loan, and many other transactions. If you haven't checked your credit score lately, it may be an incentive to know that some 79 percent of all credit reports have errors, and that 25 percent of these errors are significant enough to cause a credit denial. You can order your credit report from TransUnion (www.transunion.com), Equifax (www.equifax.com), or Experian (www.experian.com). Residents in Midwestern and Western states can obtain one free credit report per year. Residents of Southern states will be able to get free credit reports as of June 1, and Eastern state residents as of September 1, 2005.