December 28, 2009
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Tips For A Financially Healthy New Year, Pt.1
Know where you are and where you're going.The New Year is always a good time for credit card customers to evaluate their debt situation and resolve to improve their financial position. If you are one of those individuals, you may be interested in learning some simple ways that you too can find yourself with less credit card debt and greater peace of mind. The Illinois Certified Public Accountants Society (CPA) has a number of recommendations for 2010 that will help you.
1. Evaluate your liabilities and assets: Before you can determine what you need to do to clean up your finances, you first have to know where your financial position. Begin by making a list of all your assets including 401K's, property, vehicles, bank accounts, insurance policies, stocks and bonds, investments etc. Next, make a list of all your liabilities including credit card debt, personal loans, student loans, mortgage balances, automobile loans, boat loans, recreational vehicle loans, medical bills, and any other outstanding debt. Subtract the liabilities from the assets and you have your net worth.
2. Check your credit report: By law all Americans are entitled to a free credit report. Retrieve your free report by visiting www.annualcreditreport.com and check it for any errors. You should address them at once. Each of the three major credit reporting bureaus provide simple instructions on fixing errors including credit card discrepancies, mortgage loan discrepancies, and unauthorized accounts. Most of all pay special attention to any suspicious activity.
3. Gather the family around the table to devise a budget: Financial decisions should be a shared responsibility between husband and wife and family. When everyone is on the same track you will be more likely to stay on track. Involve the children whenever possible. It teaches them financial responsibility and gives them an opportunity to participate in managing the family budget and can help reduce credit card spending. When working on your budget, list all family income including paychecks and retirement income. Be realistic in estimating expenses; especially when it comes to credit card payments. It's always safer to estimate higher rather than lower. Find a good software program like Quicken to make it easier and quicker to maintain. Be sure to monitor you budget regularly and make changes when necessary.