Friday, December 30, 2011

Getting Your Financial House in Order in 2012

I'm taking a little different approach to goal setting this year.  This year I'm compiling all those things "I've been meaning to do" and will be getting them done in 2012.  Earlier this week I wrote about 12 decorating/organizing projects for the year.  Today I'm letting you know the 12 steps I'm going to take to get our financial house in order during 2012.

For those of you who read me regularly you know I've shared our financials goals and have been updating our progress monthly.  There are a number of other items that I've been "meaning" to do in regards to our finances and haven't found the time to get around to them.

Earlier this month I was reading Money Magazine, they had an article entitled "Money Management for the Time Pressed".  While I didn't think all of the suggestions pertained to our situation, I did think that a significant number of them should be reviewed.  Here are some of the items from the article as well as other items I've added.  I plan to tackle these throughout the year and will share my progress with you monthly as well as write in more detail what I've learned.

1.  Set a Budget

We are not a family who tracks every single penny.  I know, I know - according to Dave Ramsey and others we should.  If we did I probably wouldn't have to ask "where does all our money go", however that's not the way we roll.  I do recognize certain "black holes" of money that could be plugged (can anyone say take out) as well as some changes I can make to our money management.  This will be the first area I tackle in 2012.

2.  Target Savings

I've shared with you the success that I've had with our Christmas account.  My plan is to replicate that success with a decorating account and a vacation account.  We didn't quite hit our target this year for debt repayment, mostly due to the fact that I needed to buy our airlines tickets and pay for the balance of the cruise.  I'll be looking at all of our savings areas to see what enhancements can be made

3.  Review Our Tax Situation

Preliminary review of our taxes show that we will be paying in again this year.  Instead of increasing our withholdings, I plan to do some research to see what we can do to decrease the amount of taxes we pay.  Planning ahead will allow us to take full advantage of deductions and credits that we may not be currently maximizing.

4.  Review Our Retirement Plan

I think a lot of us put our retirement plan on auto pilot and don't really think about it.  The financial company who manages our 401K has a plan that allows for this auto pilot, but I do think that we need to periodically look at the full portfolio to determine if changes need to be made. 

5.  Review Our Credit Score

We recently refinanced our mortgage so I am aware of what credit score was as of December.  However, it's important to review your score at least once a year correcting any mistakes or inconsistencies.  We found that one of the accounts we paid off didn't show a zero balance, easily correctable but emphasizes how easily mistakes happen.

6.  Shrink Our Bills

How many of us don't pay attention to our cable, Internet or phone rates?  With electronic billing it's very easy for the rates to creep up while we don't even notice.  The best way to make sure that you are getting the lowest rates is to periodically shop to see what the competition is offering. 

7.  Review Household Energy Efficiencies

While we can't necessarily shop our utilities, we can make sure that we are taking simple steps to maximize our household efficiencies.  I'm pretty sure that we have many areas in our house that could be improved with fairly little effort.

8.  Prepare for Medical Incapacitation

When my mom had her medical condition early this year I talked about the importance of preparing your finances in case you are unable to communicate.  Guess what, I haven't done a lot of what I wanted to do.  This is an area that I need to get in order so that if something happens to me it's one less stress for my husband.

9.  Prepare a Will and a Living Will

I've told enough people about my wishes were something to happen to me that hopefully there would't be any arguments about what to do, but we shouldn't leave some things to chance.  In the last couple of years I have seen many young people die unexpectedly.  Having a will and end of life wishes clearly outlined can save a lot of heartache for those left behind.  This is an area that my husband and I haven't given a lot of focus, we will be rectifying that this year.

10.  Cut the Clutter

While I've taken steps to control my paperwork there is still much more to do.  My filing system needs to be improved and I'm sure that there are papers to be purged.

11.  Disaster Preparedness

Do you have all your important documents together if you need to get out quickly?  What about if your house burns down or is blown away in a tornado?  Making sure that you have copies of key documents is important and another thing we haven't been very good at doing.

12.  Career Readiness

Does your family rely on your income?  How easy would it be for you to find another job?  Is your resume updated?  None of us plan to be without a job but many of us find ourselves unexpectedly in that situation.  What's your plan and how long can you survive?  I'll be reviewing my personal readiness and identifying gaps that I can work to improve.

How about it, you want to come along for the ride?  When I post my monthly topics feel free to link up any related posts.

I'll be linking this up at Life as Mom

You might also like:

2012 Decoration/Organizing List


  1. This is a great checklist. #9 is the number 1 item on our 2012 to-do list. No more excuses!

  2. Do you usually owe for state and federal, or both? One thing you can do to reduce state taxes (depending on how your state does things) is to put money in a 529 plan to save for your kid's college (if you were planning to save money for them anyway).

    Another thing you could look into is to see if your state has NAP tax credits for certain non-profits in your state. For example, one charity my husband favors will give you a credit so that you get a 50% tax credit on your donation. So, donate $100, get $50 off state taxes. WOW!

  3. We usually get back for state and owe on Federal. We have college pretty much taken care of. The NAP tax credit was a good idea but it looks like our state doesn't offer anything, thanks for the idea though.

    Off the top of my head I was thinking about retirement savings but I want to do some more research as to what, if any, other options there are.