Year End Financial Checklist

Year End Financial ChecklistCan you believe we are near the end of the year already?

Time flies and I am sure that if you are like me,  you are looking forward to the holiday celebrations and some well deserved rest.

However, before the year runs out, I wanted to give you a year end financial checklist.

The great Zig Ziglar said: “It’s true. Spectacular preparation precedes spectacular performance.

These actions will help you prepare to  start the new year on the right foot with your finances:

1. Check your Credit Report

Have you checked your credit report lately? This is something you should do at least once a year.

According to the Federal Trade Commission (FTC):

A credit report includes information on where you live, how you pay your bills, and whether you’ve been sued, arrested, or filed for bankruptcy.

Nationwide consumer reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.

So take the time to request a copy of your credit report.

  • You can order your free annual credit report online at, by calling 1-877-322-8228, or by completing the Annual Credit Report Request Form and mailing it to:
    • Annual Credit Report Request Service
    • P.O. Box 105281
    • Atlanta, GA 30348-5281
  • Get a report from each one of the agencies.
    • They are supposed to cover the same information but there can be differences.
    • In some cases entries in one report will not show up on the other reports.
  • In case you cannot get a copy of your report from the online website, proceed with the phone call or complete the form to request via  mail.
    • Just make sure you get your hands on that report.
    • If I had done this, I would have taken the steps to correct the problem before starting the mortgage refinance.
  • Review your report for any inaccurate entries.
    • Keep in mind that only entries that are inaccurate can be removed from the report.
    • Don’t fall for scams that promise to “clean-up your credit”.
  • If you find any inaccurate entries, contact the appropriate credit reporting agency.
    • Send a letter via certified mail, return receipt requested detailing the inaccuracies.
    • Consumer reporting agencies must correct or delete inaccurate, incomplete, or unverifiable information.
    • Inaccurate, incomplete or unverifiable information must be removed or corrected, usually within 30 days.
    • Additional information can be found at the FTC website.

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2. Assess Your Insurance Needs

As you work on your financial plan, I also want you to consider the need to manage the risks to your finances by evaluating the role of insurance in your financial plan.

What is the role of insurance? In simple terms, insurance is the tool that is designed to protect you and your family against what might happen.

Ensure you have the right type of insurance and the right coverage to protect your financial plan.

3. Check Your Retirement Plan

Understand how your plan is progressing and make adjustments as needed.

Even with all the focus on personal finances today, planning for retirement is one area where we continue to come up short.

The good news is that you can do better than average. Seven years ago, I was part of those statistics but now I have a plan that is yielding good results.

Here is how I am preparing for retirement.

4. Prepare a Will

Do you have a will? If not, you are among 50% of Americans with children who have neglected this important step.

So what are some of your reasons for not dealing with this issue? You might think it is costly (it is not), or complex (it is not), or that simply you don’t have anything to leave to anyone so you don’t need a will (oh but you do).

Or you might just not want to think about your own mortality.

However, the reality is that we will all face death and the sooner you face that fact, the better off you will be.

So here are the 3 Reasons you should prepare a will:

  1. Because it puts you in control:
    • If you die without a will, the state takes over deciding what happens with your property.
    • The state already has too much say in what happens in our private lives.
    • There is no wisdom in leaving the disposition of your assets to the government.
  2. Because it is simple and cost effective:
    • You don’t need a high priced estate lawyer to do this. For most of us it is really a simple process.
    • Personally I used an online service that provided my wife and I with the required state specific forms for our wills.
    • It just took a few hours and less than $50 and we are able to put our last wishes on paper.
  3. Because it shows love for your family:
    • Imagine if something were to happen to you. In the midst of the grief and sorrow of losing you, your family also has to deal with the legal ramifications of what to do with your assets.
    • Don’t leave a problem behind. Love your family to the end by taking care of your will preparation today.

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5. Get on a Budget

I have always told you, the budget is the key to your financial success.

If you can’t control your money, you can’t build savings, you can’t pay-off debt, you can’t plan for the future.

Make 2015 your best financial year by starting to get control of your money today!!!

What other steps could you take this month to help you make progress with your money in 2015?

The Best Way To Catch The Stock Market Upswings

Dow Jones over 15,000 (May 2013)

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Did you catch it? Did you get to ride this week’s stock market upswing? On Tuesday (May 7), the Dow Jones Industrial Average closed over 15,000 points for the first time in its history. If you are new to the topic of investing and the stock market is as foreign to you as a farmers market, don’t worry. I will try to give you the basics.

The Dow Jones is simply an index that shows how 30 large publicly owned companies based in the United States have traded during a standard trading session in the stock market. In combination with other indices it gives us one perspective on the health of the national economy.

It was a big celebration day for Wall Street (commemorative caps were even made) and rightly so. I do believe that a key component of your financial plan should be investing for the future and I believe the stock market is still good place to invest for retirement and for wealth building. Whether  you are new to investing or a seasoned pro, I want you to be ready to make the most of it.

The best way to catch the stock market upswings is to find your balance, learn about investing, pick an investment strategy, and staying consistent with your investing.

1. Find Your Balance

The stock market consistently has ups and downs (you might remember that the Dow Jones got as low as 6,000 points during the 2008 recession). It changes constantly so it reminds of those massive waves that surfers try to negotiate on a regular basis. Now, I don’t surf but I have observed that one of the keys for negotiating the waves is to find a balanced position.

How do you find that balanced position with your finances? There are some foundational steps you need to complete before you start diving into investing:

  1. Get control of your money via a monthly budget.
  2. Pay off your consumer debt (everything but the mortgage).
  3. Save 3-6 months of expenses in an emergency fund.

If you complete those 3 steps above you will be on a firm foundation with your money. You need to invest from a position of strength and not a position of weakness. Build a firm foundation and never, never borrow money to invest.

2. Learn about Investing

As I watch surfers, I don’t think they began by simply jumping in the water and braving the waves. That would be a sure way to get hurt. You need to understand terms, techniques and you need to practice. Most likely you will need a coach to guide you through the learning.

When you are ready to begin investing, learn all you can. You need good information: What’s a stock? What’s a dividend? How do I get into mutual funds? Are bonds or stocks better in the long run? Is it all right to invest in single stocks?

Find someone who is already investing and doing well and ask questions. You can also find a financial planner that is not simply interested in selling but is interested in teaching and helping you to reach your goals. Read about investing via books or good press/blog articles. The more you learn, the more comfortable you will be with investing.

3. Pick an Investment Strategy

Now we are really talking about the core issue. What is it that you are trying to do? I bet if you ask one of those surfers, their strategy for riding the waves is not very complicated because they need to act and react very quickly. Similarly, just like with anything around finances simple and basic is the way to go. You need to make sure you understand it and that you can explain it to someone else.

For example, my investing strategy is simple. In both my 401K and Roth IRA I am investing solely in 4 kinds of Stock Mutual Funds with a long track record (of at least 10 years). A mutual fund is an investment where thousands of people combine their money to purchase a wide diversity of stocks, bonds or other types of investments. The mutual funds are limited to the type of investment shown in their prospectus.

I am avoiding investing in single stocks and I am not investing in any bonds funds. My wife also has an IRA and a Roth IRA and we are applying the same approach to those accounts. This has been my strategy for the last 7 years and I am sticking with it. I have seen good results so I know this can work.

4. Stay Consistent with Your Investing

Did you know that for those surfers to ride the waves, they need to actually be in the water? Sounds silly, right? Investing works the same way. You have to stay in the market and not panic every time it goes down; or get super excited and alter your investment strategy the next time it goes up. If you stay in the market, you will catch the upswing of the market every time!

The market will change. I got a little worried when the Dow Jones hit 6,000 points in 2008 but I stayed the course and I have reaped the benefits. I have also learned to ride the lows. You have to think long term if you are going to invest. If you need the money within 5 years (car replacement, down payment on a home) you are better off saving it into a money market savings account where it will be safe. If you have more time (like for retirement, college, wealth building), then invest the money and leave it alone. Be consistent!

What’s your investment strategy? Leave me a comment and let me know!

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5 Financial Products That I Avoid

No ThanksTeaching and coaching involve sharing knowledge on how to do certain things. In the case of personal finances I usually focus on the  method for doing something with your money like how to do a budget or how to get out of debt.

But it is also important to share what not to do with your money so you can keep more of it! So today’s coaching post is devoted to what products to avoid in your financial plan.

Here are 5 Financial Products That I Avoid:

1. The Single Stock

I believe investing in the market it’s a great idea. Once you have your financial household in good shape, you should be investing for long term goals such as retirement/college savings and also to build wealth. However, I do stay away from the single stock purchase and focus instead on diversification by investing in mutual funds.

A mutual fund is an investment where thousands of people combine their money to purchase a wide diversity of stocks, bonds or other types of investment. I invest in 4 types of stock mutual funds, so that’s diversification on top of diversification. If all your money is one single stock or only in one type of investment fund, your risk is too high.

2. The 30-year Mortgage

30 years has been the standard length for a mortgage loan. There is not much rhyme or reason to it except that someone a long time ago decided it was the right length of time. However, you can save a lot of interest by using a 15-year or 20-year mortgage instead. With interest rates as low as they are today, the difference in the monthly payment is not that significant but the savings in interest are.

We chose a 15-year mortgage for our home and we are paying extra so we are planning to pay it off early.

3. Extended Warranties

When you purchase a home appliance or a piece of home electronics, you will be met at the register with the offer for an extended warranty for 2-3 years on top of the standard warranty. The sales pitch is that the warranty will cover the costs of replacing or fixing if the item breaks. However, you are better off using your emergency fund to cover the replacement costs in the eventuality that something does break down. There is no need to pay extra for the “protection”.

And frankly, if the equipment is that fragile that it could break inside of 2-3 years, maybe you should be looking at a different brand.

4. The Home Warranty

Here the sales pitch is to address a “major” item such as the furnace or a major plumbing/electrical repair. When we purchased our home about 2 years ago, the previous owners had an existing home warranty so it came with the house. We tried to use it one time and on top of the annual fee of about $500, we had to a pay a service call fee of $75 for someone (of their choosing) to just come and look at the problem.

We canceled the home warranty the next year because it was not worth it. Instead plan for home repairs with with an emergency fund.

5. Whole Life/Universal Insurance

If you have anyone depending on your income, you need to make sure they will be taken care of in case something happens to you. However, the whole life/universal type of policy it’s too expensive.

Your best value is to have 20 to 30 year Term Life insurance. You can get better coverage for less money. The monthly savings can be used for paying down on debt, savings, or investing.

What do you think? Have you used any of these products? What has been your experience? Are there any other financial products you avoid?

Presione aquí para la versión de este artículo en Español.

April is Financial Literacy Month

April is National Financial Literacy Month, that time of year we set aside a few minutes to learn how money really works and apply new-found lessons to our financial lives.

This year I am honored to be working together with over a dozen Personal Finance Bloggers to promote financial literacy with 2-minute videos about a variety of topics such as Kids & Money, Roth IRA, or what do you do with a room that has no room? We will share a video each working day in April. You can watch the video of the day below. Enjoy and remember: there is always Help and Hope for Your Finances!

April 30 Video: Steve Stewart from concludes our series of videos with a strong call for continuing the efforts to educate everyone on how to manage their finances:

Previous Videos

Week 4 (Apr 23-Apr 27)

Week 3 (Apr 16-Apr 20)

Week 2 (Apr 9-Apr 13)

  • April 13 Video: Jackie Walters from produced this humorous video created by her daughter to exemplify the importance for us to save for a vacation.
  • April 12 Video:TheJennyPincher discusses the Time Value of Clipping Coupons. Clipping coupons is not a necessary part of getting out of debt as it doesn’t work for everyone. It takes a lot of time, effort and money to get the best deals so when thinking about if its right for you there are three questions to ask yourself.
  • April 11 Video: I discuss building up your emergency reserve/fund. After you watch the video, you can find additional information at this link.
  • April 10 Video: Travis Pizel from Our Journey To Zero shares 4 ways to communicate about money in a relationship and how it is helping them pay off $100,000 in credit card debt.
  • April 9 Video: Philip Taylor from answers 10 quick questions about the powerful investment vehicle, the Roth IRA.

Week 1 (Apr 2-Apr 6)