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?

How I Am Preparing For Retirement

How I Am Preparing for RetirementDuring this month I will officially hit my mid 40s. This will also put me within 10 years of being eligible for retirement.

So I decided to take a moment and evaluate how I am doing in my preparation for that milestone.

I am not saying that I plan to retire 10 years from now, but it will be nice to have the option available to me.

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

My fellow financial coach Jon White, recently shared some pretty depressing statistics about retirement. Out of the list, here are the 3 that caught my attention the most:

  • Average savings of a 50 year old: $43,797.
  • Percentage of Americans who don’t save anything for retirement: 36% (more than 1 in 4).
  • Percentage of people ages 30-54 who believe they will not have enough money put away for retirement: 80%.

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 a simple strategy that you can follow to prepare for your retirement:

Let me know what you think!

I. What I Have Done

  • Learned to live on less than I make. With a monthly spending plan (budget) in place our money works harder for us.
  • Eliminated all consumer debt. My wife and I have been debt free (except for the mortgage) for almost 5 years now. Without debt payments, we have an increased cash flow that enables us  to save for retirement.
  • Built an emergency reserve of 6 months of expenses. When life happens and we need to address a financial crisis, we can turn it into an inconvenience.
  • When we bought our house, we got one that fit our income level, with a monthly payment of no more than 25% of our take home pay and with loan term of 15 years.
  • Purchased term life insurance. I have about 8-10 times my annual income. In the event of my passing, my family will be well taken care off financially without having to use any retirement savings.
  • Determined what my monthly retirements savings should be based on my desired level of income at retirement. You can use this simple form to do to the same.

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II. What I am Doing Right Now

  • Contributing to a 401K plan. I am contributing up to the match offered by my company. I also took the option of contributing to a Roth 401K plan. The difference between a traditional 401K plan and a Roth 401K plan, is that the Roth 401K grows tax free. Chances are that you will be in a higher tax bracket when you retire, so it is better to pay taxes now. Sadly, according to Money Magazine, only 6% of workers who are eligible for a Roth 401(k), have signed up for one. Make your contributions with after tax dollars!
  • Contributing to a Roth IRA. You should be putting 15% of your annual gross income towards retirement. I am doing that by combining contributions to the 401K plan and to the IRA. Again, if you qualify, a Roth IRA is a better option than a traditional IRA because it grows tax free. Another one of my fellow financial coaches, Steve Stewart, pointed me to this useful guide on Roth IRAs.
  • Keeping my investing strategy simple. In both my 401K and Roth IRA I am investing solely in 4 kinds of growth stock Mutual Funds with a long track record. No single stocks and no bonds funds.
  • Monitoring my investments with a long term view. In spite of all the alarmist reports from the news, the stock market has done very well historically. Yes, check regularly how you are doing, but turn off the daily news. Having a long term perspective will keep you from making rash decisions with your money.
  • Paying extra on the mortgage. Even though we have a 15 year mortgage, we don’t intent to stay in debt that long. My goal is to pay that mortgage off by the time I turn 50 (or in 5 years).

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III. What I will Do in the Future

  • Pay off the mortgage. Imagine getting to retirement without a mortgage payment. Would you prefer the peace of mind of having your home be truly yours, or would you rather hang on to that mortgage to keep your tax deduction? Think about it!
  • When I turn 60, I will purchase Long Term Care Insurance. This is the type of insurance that covers the costs of a nursing home or in-home nursing care. This type of expense can really eat into your retirement nest egg and you need a hedge of protection around it.
  • Continue working and continue being productive. In reality, I never intend to officially “retire”. The notion implies moving to a location with a warmer climate and taking it easy all day. I may transition to a different kind of work when I hit that milestone with my current job, but I am not retiring ever. I have plans to continue doing all that God has in front of me and I need to be prepared for that transition to the best of my ability.

Planning for the future is a sign of wisdom. As a Christian, I want to live like Christ died yesterday (always remembering His sacrifice), rose today (with great joy), and is coming back tomorrow (with great hope).

Until He returns, I have work to do. How about you?

“So teach us to number our days, That we may present to You a heart of wisdom.”
Psalm 90:12 (NASB)