2013 is still in its infancy and the fiscal cliff, at least in some ways, is behind us. Now, many of us are turning to our personal finances in hopes of finding new ways that will keep more of our money in our bank accounts. Whether it’s too much credit card debt or concerns about having enough to retire with, here are revised rules for making 2013 the year you find some degree of financial freedom.
Before we get started, it’s important to understand that changing tax guidelines will affect all of us to some degree and it all depends on how much we earn, which region of the country we live in (yes really), how many dependents we claim and a host of other tick marks. Be sure you have those bases covered before you set out for your own financial overhaul.
Your Credit Cards
It’s time to become assertive with your credit card companies. If you’ve been a long time loyal customer, it might be time to reap a few rewards for that consistent loyalty. Contact your card company and ask about a lowered APR. If you can wrangle even a small reduction in interest, it can mean a few extra dollars in the bank this time next year. Remember though – your card company’s not going to call you – it’s up to you to flex your assertive side. If you feel like your credit is strong enough for a cut and your credit card network isn’t budging, you might want to consider changing companies. Choose one with a 0% intro rate for balance transfers and after you’ve compared the terms and conditions, make your move. The Discover It card is brand new for 2013 and it has a ton of remarkable features, including 14 months interest free for balance transfers.
Have a rewards card? Are you making the most of those perks and benefits? If not, you should. Cash them in – even if you end up with a $50 gift card, you can make the most of it. Give it to the neighbor’s kid who’s graduating in the spring, splurge on that new blender for the kitchen or donate it to charity. If you have considerable points, consider buying your graduating high school senior a new laptop or tablet as she prepares to head to college in the fall. The point is – don’t miss out on those rewards points offered by your credit card company; after all, it’s likely one of the reasons you chose that particular credit card in the first place.
Pay down your credit card debt. This is a no-brainer and it doesn’t matter how overwhelmed you feel, especially if you have several credit cards you’re carrying balances on. Start with the one with the highest APR or balance and work your way down. Set goals – for instance, try to pay off, in its entirety, the one card with the highest balance by September or work towards paying down $5,000 by the time the holidays roll around again.
Shopping
Speaking of shopping, have you thought about doing a bit of Christmas shopping in March? Better still, start now while prices are ridiculously low. One of our readers actually has bought all of her wrapping paper, holiday cards, ribbons and even shipping tape and labels for next year – and she got it all at 80% off at a local discount store. She stores it in the closet under her stairs where she keeps all of her other holiday “stuff”. She also reports she’s bought a few small gifts for her nephew at substantial savings already. She’ll do this throughout the year with the goal of not feeling overwhelmed or stressed when the holidays roll around and she’s looking at buying a dozen gifts -the lion’s share is already finished. Keep your eyes open and a few dollars put back for when you stumble across the perfect gift that’s half off.
Don’t forget yourself, either. Know how the term “mad money” came about? In the 50s when women were often found at home instead of the workplace, many felt a bit left out when it came to the family finances. Women often had to ask for money from their husbands to buy a new dress or shoes. That sometimes led to a bit of resentment; many women would stash the change left over from their weekly grocery trips (their husbands gave them cash instead of the checkbook – it’s easy to understand the resentment) and soon, they’d have a bit of money put back and whenever their husbands refused to give them money for those extras, they’d get mad, grab their stash and go on their own little personal -and secretive – shopping spree with their “mad money”.
Many women, even though they have careers and earn their own money these days, still have their own versions of “mad money” stashes for sentimental reasons after learning their mothers or grandmothers did so years ago. Cheesy? Maybe – but whatever you call it, a Saturday afternoon spent window shopping is always better when you have a few dollars that’s yours to spend. As my grandmother used to say, it’s good for the soul.
Taxes
Contrary to the politicians who are busy patting themselves and each other on the back, tax rates are likely to rise for most Americans this year – yes, even those who have lower incomes. Now’s the time to rein in spending in a proactive manner so that you’re not having to react to an overwhelming tax bill. Also, be sure to explore any tax breaks you might be eligible for. Millions leave money on the table every year because they’re not aware of certain deductions.
Retirement
Ready to retire? Not sure? Now’s the time to dig in and figure it out. Did you know that a mere 10% of Americans have any idea how much they need to be putting back in order to retire? Not doing so is only setting you up for a brutal reality check later. Cover the bases now while you can still offset the damage – if there is any. Financial advisers generally recommend saving enough to replace 80 percent or more of your income. This equates to a worker who earns $80,000 annually should realistically put back around $2 million.
Any idea what the most common mistakes are when it comes to your retirement account? How about:
- Paying high fees
- Too-conservative portfolios
- Failing to stay current on how well your investments are doing
These are just a few mistakes we make. There are tons of free resources that can help you as you help yourself – but you have to seek it out.
We could continue this list for days – but it all comes down to the same thing: take a stand, cover your bases and assume nothing. If you can approach your financial well being with confidence and a sense of covering the bases, you’re bound to have a much better 2013.
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