New year good time to make financial plans

By Ingrid Stegemoeller, Herald staff writer

If your wallet and credit card have gotten more of a workout this holiday season than your arms and abs, it might be time to sit down and figure out a financial plan before the new year.

"It's a good time to think and do some planning," said Adele Brady Bolson, a certified public accountant in Bellevue.

"Review what you did with your money in 2008. Were you spending money in a way that's consistent with your values? Are you meeting goals to save money for retirement, kids' education and other things you want to do?"

Bolson encouraged people not to build up credit card balances with too much holiday spending, but if it happens, she recommended making debt payments a high priority in January and February.

Laurie Tufford, chief executive director of Consumer Credit Counseling Service in Kennewick, advised taking time to figure out how much money you owe and how much you have coming in.

"You need to know where you're at," she said.

Start collecting statements in January and build a spreadsheet or use a notebook to make a balance sheet.

"Once you get all that written down, the next thing is to start tracking your spending," Tufford said.

Minimizing unnecessary expenses is one suggestion.

That requires thinking ahead about what constitutes necessary, Bolson and Tufford said.

Though planning takes more work, it also gives consumers a feeling of control over their money.

"If you close your eyes and stick your head in the sand it doesn't make you feel any safer," Bolson said.

Keeping a budget doesn't require spending a lot of money on software or devoting loads of time, Tufford said.

"In reality it's all about nuts and bolts and a notebook and calculator are just fine," she said.

If it takes more than an hour to set up and 15 or 20 minutes to maintain each time you get paid, it's too complicated.

"When we try to start something new we make it bigger than it needs to be," Tufford said.

The start of a new year also is a good time to get records organized. File financial papers that have been cluttering your countertops and toss records that are four or five years old, Bolson said.

The Internal Revenue Service has three years after a tax return is filed plus the time it took to file to do an audit, she said.

In addition to making a plan for 2009, covering all the tax bases for 2008 also is important, Bolson said.

For example, 401(k) contributions must be made by Dec. 31, as well as any charitable donations you want as deductions on your 2008 tax returns, she said.

For those who have lost well-paying jobs, it may be difficult to swallow taking a lesser paying one, but "some income is really better than no income," Bolson said.

"Avoid the magical thinking ... pretending that everything will be all right by itself, when everything can be all right but you have to make it all right," she said.

Finally, as people have watched their investments lose value and have dealt daily with sour national financial and economic news, Bolson said it's important to see the positives.

"Stop and take stock of all the things that are going right for you financially," she said.

For more information about managing your finances, go to www.360financialliteracy.org.

Consumer Credit Counseling Service can be reached at 737-1973.

tool name

Sunday, Dec. 28, 2008

New year good time to make financial plans

By Ingrid Stegemoeller, Herald staff writer