Do a financial self appraisal

Action Items :

1. Calculate your net worth.

Action Items :

1. Where does your money go? Figure out, from whatever method you use to track your spending, Mint, Yodlee, spreadsheet, Quicken, paper & pencil, and categorize last year’s expenses. (If you don’t track regularly, you might want to download your credit/debit card statements and figure this out. It will take more than 15 minutes but is very illuminating to say the least).
2. Are you happy with where your money is going? If not, can you pick one area where you want to be more conscious about spending money and getting it in control in the next 1-2 months?
3. Does the spending match BOTH you and your spouse’s values?

Action Items :

1. Are you saving enough for your retirement? If not start today, open an IRA.
2. Have you rebalanced your portfolio recently? Does your portfolio reflect your risk tolerance and the asset allocation level for your expected retirement age?
3. Are you putting aside as much money as you want for your retirement? If not, why? Can you increase the contribution by 1-2%. This way you won’t feel the pinch (esp. if you are getting a raise) and your nest egg will be happy.
4. If you are over 70.5, have you taken the required minimum distribution?

Action Items :

1. Do you know how much life insurance you need?
2. How about renters/homeowners insurance?
3. Are your deductibles and amount of coverage for car insurance match the amount you can afford and need? This would be a good time to call for car insurance quotes, periodically checking the competition will help keep the rates low.
4. Do you have enough emergency funds to float you during tough times? If not, can you start one today with whatever you can afford?

Action Items :

1. Check your withholding : I don’t think getting a refund is good OR bad. It depends on the person, if you spend all the “windfall” money, you might be better off by adjusting and saving every month or if you are someone who has trouble saving, feel free to overpay and save the windfall. But know what is right for you and adjust accordingly.
2. Decide on charitable contributions : If you don’t donate enough in one year to take itemized deductions, can you save the contribution for a whole year and give every other year. For example, you plan to give $10000 in 2011 and $10000 in 2012, if you give it like that it “might” not make sense to take itemized over standard deductions esp. if you don’t have other deductions. Can you save the $10000 and give $20000 in 2012? So you can alternate between itemized and standard deductions every other year to get the best of both?
3. Prepay property taxes : Same logic for property taxes, you prepay them so that you can have one in Jan and one Dec to bring them in the same year you itemize your deductions?
4. Check your capital gains and losses : See if it make sense to get rid of some stocks to balance any capital gains + $3000 allowable loss. If you have any greatly appreciated (long term) stock and you give to charity, consider donating the stock to the charity. You can deduct the entire value and don’t have to pay any capital gains. Don’t give depreciated stock to charity, sell it and take the loss in the taxes.
5. Organize your receipts : If you have time during the holidays, organize your tax receipts so that you won’t miss any deductions.
6. Empty Flexible spending accounts : If you need ideas for emptying the account check this post – FSA eligible expenses. This would be a good time to adjust the FSA amount as well so that you won’t over fund it next year.

Action Items :

1. Do you have enough health insurance?
2. Can you take advantage of tax advantages accounts like Flexible spending accounts or Health Savings account?
3. Did you get your annual free wellness checkup?
4. Have your annual dental & vision appointment?
5. Learn about your insurance perks (like gym discounts) and see if you can use them in your budget to reduce your spending.

Action Items :

1. Have you checked you credit reports? Better yet, schedule to get a credit report from one of the credit bureaus every 4 months – Experian in Jan, Transunion in May and Equifax in Sept. Fix any errors.
2. Have your checked your credit scores? If you are not in the market for any major purchases you can get free NON-FICO credit scores from Credit Sesame,Credit Karma and Equifax Score Card. If you want the real FICO score, you can get them at myFICO for $19.95 (or free with a 14 day credit monitoring trial).
3. If you have any debt, can you automate the payments to make sure you don’t miss any payments? Or increase the amount you throw at your debt by even 1%?

Action Items :

1. Do you have a will in place? If you have an estate, have you funded your estate?
2. Have you checked the beneficiary information in your life insurance, investments and all your accounts?
3. Do you have a financial power of attorney?
4. How about a health care derivative?I know it is depressing to think about all this, but IF I get into an accident I would prefer someone I love to make a decision for me and not some random stranger.

Action Items :

1. If you don’t like your bank, switch your bank account.Are you maximizing your CD and savings rate? Take a minute to check if you can do better. The end of the year would be a good time to move so that you don’t have to deal with 2 different 1099s next tax season.Based on your spending pattern, do you have the best credit card that will give you all the credit card perks and gives you the maximum rewards?

Action Items :

1. Are you spending most of your time on something that you value most?