CFO Sink Offers Money-saving New Year’s Resolutions for Florida Families
Kevin Cate or Jayme O’Rourke
TALLAHASSEE— The New Year is just around the corner, and while 2008 will be a year to remember for financial crises large and small, Florida Chief Financial Officer Alex Sink and Florida’s Department of Financial Services are encouraging Floridians to take stock of their personal financial situations and make resolutions that will make 2009 a happy and prosperous new year.
No. 1 – Keep Track of Your Expenses
Sounds too simple to be true, but financial planners and confirmed budgeters agree that just by keeping track of expenses on a weekly basis, most people will end up reducing their cash outlay by as much as 20 percent. When you become more aware of where your money is being spent, you tend to become more frugal in how you spend.
No. 2 –Make a Plan
It’s nearly impossible to improve your financial situation if you don’t know where you stand. Start by getting copies of your credit reports and making a list of what you owe in revolving or monthly debt (credit cards, mortgage or car payments) and the associated costs of that debt or the interest charged on the loan. Then list all recurring obligations whether monthly, quarterly or bi-annually. Monthly or more frequent items would include utilities, child care, and groceries. Quarterly or bi-annual items might include car repair or auto insurance, and contributions to retirement or college fund accounts. Once you’ve made your list, you’ll have the foundation to build a budget and create your 2009 financial plan.
No. 3 – Save Money – Pay Yourself First
The old adage that paying yourself first is the key to creating wealth is one of those sayings that are actually true! Make a commitment to set aside five, 10 or even 15 percent of your income for savings and stick to it. Once this becomes a habit, increase the amount you save as much as you can. If your company offers a 401(k) plan and you’re not already participating, sign up today. Many employers match employee contributions and that’s free money! Consider your options for individual retirement accounts, 529 college savings plans or health savings accounts. If you don’t already have one, start building an emergency fund that can cover your obligations for six to 12 months in the event of a financial crisis such as losing a job or a serious illness.
No. 4 – Reduce Debt, Especially Credit Card Debt
Pay off credit cards and other revolving consumer debt as quickly as possible. Credit cards often have very high interest rates and paying only the minimum monthly payment can be a very dangerous practice. Use credit cards only if you’re sure you can pay the bill in full when it comes in. If you have an emergency, pay off as much as you can monthly until the bill is paid in full. Shop around for the best rates on the credit cards you carry and limit the number of credit card accounts you have open. Most experts recommend no more than two to three credit cards per household.
No. 5 – Making Your Mortgage Work for You
Instead of making one single mortgage payment monthly, pay half of the monthly amount every two weeks allowing you to make 13 monthly payments, shortening your loan and saving you thousands of dollars in interest. If this isn’t possible, set a goal of paying an additional five to 10 percent more on your mortgage regularly or applying portions of your annual bonus to paying down the mortgage.
No. 6 – Review Your Insurance Needs Annually
Insurance is the perfect way to protect your assets. An annual review of your insurance needs will let you know if you have too little or too much. Be sure to review life, home, auto, renters and specialty insurance like that for a boat or other recreational vehicle. Riders are available with many polices to meet specific needs such as expensive jewelry, collectibles, art or other valuables. When shopping for life insurance, consult your financial planner on whether life or whole-term is a better financial strategy. As with any major expenditure, don’t be afraid to shop around and be knowledgeable when negotiating the best rates and coverage for you and your family.
No. 7 – Manage Your Taxes
If you’re getting big tax refunds each year, you’re counting on the federal government to manage your money for you better than you can. There are many resources available to help you identify the proper withholding without over-withholding. There are several options available in the marketplace that can also help you make the most of tax savings. If your employer provides a pretax option for a flexible spending account for medical and day-care expense, take advantage of these opportunities to reduce your total taxable income. You could also consider opening a health care savings account, selling stock before the year’s end if it is generating losses, increasing charitable contributions or establishing a trust and maximizing your own pension and IRA contributions.
No. 8 – Prevent Identity Theft
Identity theft protection is everyone’s responsibility. Millions of Americans fall victim to identity theft annually. Request a credit report annually to ensure that your accounts are in order and that you recognize all creditors listed. Be careful about using credit cards online and over the phone and guard your social security number and other personal information carefully. Use online banking to avoid the millions of checks stolen from mailboxes every year. Be wary of scams by phone, mail or email, no matter how legitimate they appear when asking you to provide “your bank” with your personal information. It would be highly unusual for a bank to ask a customer to provide that information in those formats. Always call your local bank or customer service number to confirm any requests by a financial institution for such information.
No. 9 – Plan for Retirement
Most companies offer employees a 401 (k) plan where the employer matches a portion or all of an employee’s contributions up to a certain percentage. Not taking advantage of this “free money” is a mistake many people make. As Americans live longer, their retirement savings must go farther, making retirement planning a must. Outliving their finances is a major concern of many people today. A good financial planner can help you determine what you’ll need to retire comfortably.
No. 10 – Protect Your Credit Score
Check your credit score regularly to ensure that information reported to the three major bureaus is correct. If you have deficiencies, use the information to correct them and improve your standing. In addition to being top of the list in consideration for the best pricing when you need to borrow money, landlords and many employers require the ability to check your credit score before a hiring decision can be made. A credit score above 700 is considered average and those in the high 700s excellent.
Resolutions are meant to be kept. Keeping your financial resolutions will mean not just a happier new year, but a more prosperous one as well.
As a statewide elected officer of the Florida Cabinet, Chief Financial Officer Alex Sink oversees the department of Financial Services, a multi-division state agency responsible for management of state funds and unclaimed property, assisting consumers who request information and help related to financial services, and investigating financial fraud. Sink also serves as the State Fire Marshal.