Getting Your Finances On Track In 2008
In the next few days, I plan on reviewing my 2007 progress against my goals. However, I need to start thinking about 2008 before I have a chance to compile all the data. One of my biggest plans is to save a higher portion of my income. 2007 was a spend-heavy year for me, and it’s time to return to more basic levels of expense in most categories.
When I lay out my goals for 2008, that will be a primary focus.
Helpful for next year’s planning, Kiplinger has six suggestions for a prosperous 2008.
* Take advantage of higher IRA limits. The maximum contribution to all IRAs combined (in the role of an employee) is $5,000 (or $6,000 if you are over 50 years old). I say, “in the role of an employee” because self-employed people, as an employer, can contribute more to the SEP IRA. I may find that I no longer qualify for a Roth IRA, so while I’m considering a lump sum investment, I may wait before pulling the trigger.
* Stretch your raise even further. Use some of your raise to boost your 401(k) contribution. Now that the Roth 401(k) is available to me, I am splitting my contribution between the new account and the typical pre-tax account. Depending on other income sources, I may try to maximize my 401(k) contribution to the full $15,500.
* Focus on high-interest debt. Interest expense on debt is an unhealthy and in many times unnecessary payment. The only debt I have right now is a student loan. With savings account interest rates shrinking, it would be more beneficial for me to pay off the remainder of my student loan in 2008.
* Start gathering your tax records now. Ever year, my tax calculation increases in complexity. I think it’s time to hire a professional to make sure I’m finding every deduction and not making any mistakes. Many banks provide tax records electronically now, but it’s still important to develop a filing system to ensure everything is readily available.
* Put your bills and savings on autopilot. My telephone bill and cable bill are deducted automatically from a rewards credit card account. I am required to pay my rent by check, so that cannot be automated. My credit card payments change each month, and I cannot schedule in advance without knowing the exact amount. Savings, on the other hand, are easier.
* Protect your assets. I have not been a good protector. I’ve accumulated a fair amount of non-financial assets in the last few years, and particularly in 2007. I do not have a strong renter’s insurance policy to cover everything. This will be one goal of highest importance for the new year.
Article comments
“I may find that I no longer qualify for a Roth IRA”
I am worried about this too. My buddy at Merrill Lynch says that the income limits go up this year. Have you been able to find anything on ’08 income limits, I’ve found bubkis.
Hi Kitty: Thanks for that suggestion. I’m pretty sure my main credit cards don’t offer that option, only consistent amounts or the minimum. They certainly don’t offer it online. After all, it significantly reduces the chances of a customer missing a payment. But I will definitely double check by calling… maybe it is a “hidden feature.”
“My credit card payments change each month, and I cannot schedule in advance without knowing the exact amount. ”
Why not, I do it for my main credit card. You can call the credit card company and ask them for a form for automatic payments. The form allows you to choose minimum balance or full balance. So you mark “full balance”, specify your checking account/routing numbers and the credit card company will deduct the full amount.
The best thing is they deduct on the last day of the grace period, so you always have advantage of the full grace period. Obviously, you shall still look at your bill to ensure everything is OK.