3 Things Everyone Should Do Before the End of 2010

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New Year’s resolutions are great, but what are you doing the rest of the year?  As we roll into summer and we see the year’s halfway point approaching, it’s important to look at our goals and our progress and see if we’re on track for where we want to be in our lives.

Financially, now is the time to start preparing for the new year.  Don’t be like most people and  wait until December to think about it.

Here’s a place to start:

  • Max out your 401(k). If you are under 50 years old, your maximum annual contribution is $16,500.  If you haven’t contributed to your 401(k), yet, this means you will have to deposit $2358 per month to max it out.  If you would have started at the beginning of the year it would only be $1375 per month.  If those numbers are out of reach, at least contribute enough to get your employer’s match. If your company matches 50% of your contribution up to 5%, you need to be contributing 5%.  If your gross paycheck is $1000, you should contribute $50.  If you do so, your company will be giving you $25.  That’s free money and a 2.5% raise!   With a pre-tax contribution, you are also lowering your taxable wage, so the 5% contribution is not lowering your take-home pay by 5%.  In some cases, it may even raise your take-home pay!
  • Know your money. Take some time to examine your income and your expenses.   What are you having withheld?  Will that leave you with a large tax bill next spring?  Will it give you a huge tax refund, which is just an interest-free loan to the government? You withholding goal should be to pay nothing and receive nothing when you file your taxes in the spring.  The less you withhold, the more you have for your daily expenses, but, if you withhold too much, you risk an unaffordable tax bill and possible penalties later.  Look also at your expenses.  Have you used your gym membership in the last few months?  Cancel it. Do you know every cent you have to pay each month?  Figure it out so you can plan the rest of your financial year. A budget is helpful here.
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  • Own your debt. “It’s not my fault.” “My ex stole my bank account.” “My dog ate the bill.” “My kidneys were stolen and I woke up in a bathtub full of ice and an invoice for services rendered.” “I lost my job.” “I have an X-Box addiction.” “I gave my credit card to a stripper, but we broke up. Go after the stripper.”   Excuses.  Here’s the thing: None of it matters. You owe the debt.  Your choices are to pay the debt or file bankruptcy.   Either way, you need to own the debt and take responsibility for whatever choices you made or debt you’ve accumulated.   Denial is not a successful coping mechanism. Whatever you choose to do, know that it is your choice.  You can’t hide from your bills or your $15/day “Venti Soy Hazelnut Vanilla Cinnamon White Mocha with extra White Mocha and caramel” habit.

What are your financial plans for the rest of the year?

Update:  This post has been included in the Festival of Frugality.

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    1. We’re using almost all of our emergency fund (leaving 1 month of expenses behind) to pay off the car and then using the rest of the year to pay ourselves back.

    2. You’ve got a better emergency fund than I do. 🙁

    3. LOL, we keep $10,000 in the emergency fund (about 3-4 months of expenses)…now it’ll be at $1400. Let’s just say I’m stressed a little…we’ve never had that little of padding – not even after we put 20% down on our house.

      BUT, I don’t contribute the max to my 401k either. I contribute the minimum to get the max company match – 6%. And we only fund one Roth IRA instead of two. My padding-needed personality does keep us from investing as much as most people suggest. It’s all about personal priorities, right?

      Plus, thanks to parental help, scholarships, and 3 part-time jobs (well…I had 3…hubby only had to work summers since his parents covered everything – lucky dude), my husband and I had no college debt. That helps.

      I think the progress you’ve made and that you continue to work for is awesome! That garage sale manual is amazing and I’ve never put that kind of organized work towards anything except my marriage (*wink*)!

    4. Hi, Very important advice. I really like the “take responsibility” focus. I HATE EXCUSES!!! Keep up the good info, Barb


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