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Monday, August 31st, 2015


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Financial Resolutions Worth Keeping

If you’re like most people, you probably made some New Year’s resolutions. These resolutions typically include physical, mental, and spiritual improvement. Some common resolutions include losing 10 pounds, eating better, going to church, etc.

Not many people resolve to reduce their taxes; save $3,000 for retirement; and begin a college fund for their children, but we shouldn’t forget about financial fitness in our New Year’s resolutions. The following are some financial aspects that people should consider improving in 2004;

Budget/Save Money- The first budget consideration for individuals is to be organized and accurate. Various methods can be used. It may be necessary to experiment until finding a method that you can follow consistently. Software programs are one option. Simply writing down income and expenses is another method.

Ideally, expenses should be tracked and should never exceed income in any one period. Budgets should be realistic and easy to follow. Budget busters will happen, so plan for them. Establish a fund that is available when you need to pay insurance deductibles, fix appliances, respond to emergencies, make house repairs, etc. Here are some tips to follow:

  • Go without when feasible
  • Reuse items
  • Reduce unnecessary expenses
  • Refinance/Consolidate high interest debt
  • Shop around.

The Internet is a great way to find money saving opportunities and to obtain budgeting help. After finances are organized, many people realize more money is available than expected. If expenses are reduced, additional dollars will be available to pay down debt or to save for the future.

Pay Credit Card Debt- Individuals without any credit card debt can skip this part and can pat yourself on the back. For people with credit card debt, numerous things should be done. First, write down the total debt owed, monthly payments, and interest rates all in one place. We will come back to this step.

Next, call the creditors for a rate reduction. Also, play the teaser game. This involves transferring account balances to a card/s with a promotional rate as close to 0 percent as possible. If the credit card companies try raising the rate, transfer the balance to a card with a lower rate.

Consider canceling cards with annual fees. Also, pay on time, because this will eliminate late fees while helping credit scores. After consolidating or lowering interest rates, begin paying the most you feasibly can on the card with the highest interest rate, while paying only the minimum on the other cards. After the highest interest rate card is paid, pay all that you can on the next highest interest rate card and the minimum on the other cards. Repeat until your debt is paid off.

It must be noted that it is better to invest at a low rate of return than to pay off a 0 percent interest card. A great way to “freeze” credit card spending is to literally freeze the credit card in some ice. This will not damage the card, but should deter casual use because you have to wait for the ice to melt.

Reduce Taxes- Most people would choose to reduce taxes when it is perfectly legal. This can be accomplished in a variety of ways. First, utilize deductions that are available, including mortgage interest, tax preparing expenses, investment expenses (including advice), child tax credits, education expense credits, etc. Also, it helps to utilize tax-favored investments such as IRAs, annuities, retirement plans at work, cash value of life insurance, 529s, etc. Consult with a financial professional regarding any tax matters.

Protect Your Family and Assets- This is an area that is omitted from most peoples’ lists, but it should be a top priority- protect your loved ones. What happens in the event of a death or disability? Will the family be comfortable financially? Will the children be able to go college?

Most people’s greatest financial asset isn’t their home or investment accounts; it is the ability to earn money. It is necessary to protect against this asset being prematurely taken away. Trust me, recently a very good friend was hit by a drunk driver. She was in a hospital for two weeks and unable to work for several months.

Fortunately, it was not a financial disaster because she had saved up a “nest egg” and had a good income protection plan (disability insurance). This plan pays her if she cannot perform her own job and allows her to return to work part time while still receiving insurance benefits.

Many people say they sleep better knowing their family will be taken care of financially. Comfort comes from knowing there will be funds available to pay the mortgage, allow your spouse to retire, pay for the kids’ education, etc.

Save for Retirement/College- Everybody can do this. Utilize the match in a work retirement plan. An IRA or 529 plan can be easily set up and funded with as little as $25 or $50 a month. Larger amounts can also be contributed if you desire (up to $3,500 a year per person into an IRA or more than $300,000 into a 529 plan). These accounts can even be added as a benefit through your employer, costing them nothing.

Determine what is affordable and needed to reach financial goals. Savings plans can always be adjusted once started, so just start saving and adjust them as necessary. It is extremely rare to hear someone state, “I am glad I waited so long to start saving,” or “I wish I would have saved less.”

People frequently wish that they had started sooner, been smarter about saving, or just saved more money. Start now; there is no better time than the present. Start the year right and stick with it, as financial planning is an ongoing process. Hampton Scurlock III is CEO/Financial Planner of Scurlock Financial Services. He can be reached at 859-233-1083 or scurlockfinancial@hotmail.com

Disclaimer: Consult a financial professional before making investment decisions.

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