Christmas Deconstructed

Yesterday, we did one of my favorite holiday traditions.  Much to the consternation of my husband, the morning of New Years Day is when we take down every inch of Christmas decorations and put it all away.  Jonathan would happily leave all of the decorations up for another few weeks, but I love the fresh, clean feeling of all of the Christmas clutter tidied away.  For me, it just makes the beginning of the year start off fresh and neat…

 What my family wakes up to on New Year’s Day…a pile of Christmas…

Not unexpectedly, as a financial planner, I also like to start off a new year fresh and neat—starting new habits, getting organized, or setting goals for the year.  Here are some of my favorite ways to get off to a fresh start this year:

  1. Track your expenses—let one of the great apps out there do the heavy lifting for you. We like personally, but have heard good things about PocketGuard and You Need A Budget apps.
  2. Increase 401k savings—this time of year is perfect for increasing your 401K savings by 1%.  As cost of living adjustments or other salary increases also hit now, you may not even notice the extra savings withheld!
  3. Start investing—fun apps like Acorns or Stash make it super easy to start saving and investing, even at small levels. Acorns automatically invests your spare change by rounding up debit or credit card purchases to the nearest dollar, investing the difference.  Stash allows you to start with a balance as low as $5, and they craft portfolios tailored to specific interests like clean energy, technology, or travel.
  4. Get ready for taxes—soon your mailbox will be flooded with year end tax reports. Get ahead of the deluge with a folder ready to go.  Also, comb through bank and credit card statements for charitable donations, medical expenses, real estate and personal property taxes to be ahead of the curve with claiming your deductions.
  5. Purge file cabinet—if you are holding on to utility bills from 1998, you can probably go ahead and shred them. Here is a great chart from Everest Institute with the rough guidelines of how long to keep all of those papers jammed in your file cabinet:

  1. Review credit reports—it is a great idea to annually pull your free credit report from each of the credit agencies and review for any discrepancies, old accounts that should be closed, or unusual activity.
  2. Cancel unused memberships—in a quick scan of our credit card bills, we were still paying for an annual pass to Busch Gardens, Amazon Audible books, GoPro monthly subscription (I am not even sure what that was for) and Consumer Reports. I am pretty certain most of those came from Jonathan signing up for a “7 day free trial” and forgetting to cancel them…15 minutes and four calls later, we no longer are getting charged $42 month for those random subscriptions.
  3. Get an insurance review—with all of the unusual weather events in the past few years—earthquakes, tornados, hurricanes, etc—many property insurance policies have subtly discontinued or limited coverage on your home. Likewise, auto property damage limits have not always kept pace with the prices of cars on the road. For example, the state minimum property damage coverage for car insurance in Virginia is $20,000.  Many older car insurance policies were written with $100,000 property damage limits, thinking that 5 times the minimum should be sufficient.  However, an accident in Virginia could easily climb right past $100,000 worth of property damage!  So, now is a great time to contact your insurance agent (if you don’t have one, we can recommend several that we trust) and have your insurance policies reviewed to be sure that you have the appropriate coverage.
  4. Reevaluate your tax withholding—with the new tax code, as well as salary adjustments for the new year, now is usually great time to review your payroll tax withholdings. However, even the IRS hasn’t figured out what the new tax code means yet.  When they do, here is a link to their withholding calculator…
  5. Open 529 account—for parents thinking about saving for your child’s college, 529 plans became a lot more attractive with the recent tax act. They were already great—tax free savings accounts for any college, university, trade school, or education related expenses like books, computers, etc.—but now, the account balances are also allowed to be used for any qualified education expenses from kindergarten through 12th  529 account balances can be used for any public, private, or religious K-12 school tuition.   Homeschooling parents can use 529 accounts for homeschool expenses.  We like the Virginia 529 plans—they are low cost, invested well, and easy to use.

And, because this list goes to 11…

  1. Get a financial plan update—even if you’ve had a financial plan done before, now is a great time to update it. All of your accounts are mailing you year end statements, so it is super easy to gather the information you need to have a plan done.  When the plan is complete, you will have a few action items which make great goals to accomplish in 2018…and you can start the year knowing that you have everything in motion to accomplish your financial goals, whether they are big or small!
Christmas Deconstructed

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