Thursday, January 23, 2014

Yearly Financial Tuneup

This is almost a duplicate of what I posted last year. It's still a great article, and the ideas are still worthwhile. My additional comments for this year are italicized.
In March of 2010 The New York Times posted an article titled 31 Steps to a Financial Tuneup.  It's still available and is an interactive site, allowing you to check off the ones you finish. It also gives estimated time for each step. I consider it one of the best sites out there for yearly financial planning.
The following list has a couple personal recommendations. Other than that, it comes directly from the New York Times site.
A. If you go to church check your tithing amount.
If you aren't giving ten percent, bump it up a little bit to get closer to the ten percent goal. You should know all the good your church does with the money. If you don't, think about a different church! (~ 5 minutes)
If you don't believe in a personal God, then you're probably on the wrong blog post, but you might believe in karma. Give back to society with at least some of your money.
B. Automate as many bills as you can.
My bank lets me set up automatic payments (note #19 below). Also, I am able to set up most of my accounts so they charge automatically against my charge card, which gives me extra rewards every time I pay my electric bill! The trick is - and this is important! -  pay the charge card off completely every month. If you can't do that, you're living outside your means. Debt is an enemy that will eat you alive.
C. Sell one old thing on eBay or craigslist.
I know. This one sounds silly, and doesn't even sound like a Financial Check-up item, but it's the same as converting something useless into cash. We do it all the time in the games we play. A little extra cash doesn't hurt.
Just do one item. Just one. Every little bit helps.
1. Save 1% more from your paycheck (~5 minutes)
This really works. Even if you can't do one percent, consider a little bit more than you do now. Try to at least match your employer's matching program if you have one; I didn't when I was young - because I was stupid. I lost a lot of money because of that. Don't make the same mistake I did.
Go above the matching program if you can. Anything you can put into your 401K now can benefit you in the future, and it compounds.
2. Reconsider your investments (~30 minutes)
Where are you investing your money? It's even harder now that it was in previous years. Finding a good rate of return on your money is tedious. I'm still looking. If you have good ideas, please help everyone and comment. Make sure you're putting aside for retirement. It sneaks up on you (or eludes you). Trust me on that one. I'm sorry I didn't contribute more when I was younger.
3. Rebalance your investments (~15 minutes, but took me an hour)
It's good to analyze and rebalance these on a yearly basis. I do this every year. My retirement 401k lets me move money between different funds. I analyze the fund performance for the year and make changes. Does it make a difference? I don't know, but it makes me feel better.
4. Find a better bank (~2 hours)
In these years of less than one percent interest, maybe it feels like this isn't worth it. I still check around, though, looking for the better interest rates. Capital One bought ING, and I still have money there, but many of my local banks do almost as well.
5. Make an extra mortgage payment (~5 minutes)
If you have a mortgage, this will help pay it off early and save a lot of money in the process. It's worth it if you can afford it. Your entire financial world changes when you pay off your home.
6. Open a home equity line of credit (~a few hours)
Okay, I don't see the need for this one, but they make the point that you may not be able to open a line of credit if you lose your job. My clever brother has a line of credit and he uses the low-interest of that to fund college for my nieces.
7. Increase your student loan payment (~5 minutes)
Obviously, only if you have student loans! However, make sure you're not paying off low interest loans with money that could be better invested elsewhere.
8. Seek a lower-interest credit card (~10 minutes)
PLEASE don't just get another card. If possible pay off your (only) card every month, and this isn't an issue. However, if you are carrying a balance, ask for a better rate from your current card or seek alternatives elsewhere (but watch out for balance transfer fees). Remember: Debt is a bad habit to get into.
9. Set an automated payment toward your debt (~10 minutes)
They say to set your card for automatic minimum payments from your bank, but obviously I think it should be the entire balance. Making minimum payments is not financially healthy. BUT automatic payments at least avoid the late fees, which will sink your finances in a hurry, so set those up.
10. Read the rules on your rewards card (~15 minutes)
Make sure you're getting all you can get from your rewards. Even if you read them before, read them again since they might have changed.
11. Cash in your rewards (~10 minutes)
Card rewards only lose value over time, since the programs rarely get more generous. Earn them and burn them as fast as you can. I don't do this because I like to have a pool of points for emergency plane tickets, but I'd agree it is a good idea. I used my points last year for plane tickets I needed in February for my Dad's funeral. Now we cash them into pre-paid cards for local stores.
12. Find a better-earning rewards card (~2 hours)
Seek out help from and or try the recommendation tool at
13. Check your credit reports for free (~20 minutes)
Check one of your three major credit bureaus reports If you rotate them you can get a different one each year.
14. Consider a financial planner (~1 hour)
Find planners at or I haven't done this, but for some people it's a good idea. For others, you can get a lot of benefit from using the resources at Crown Financial Ministries (founded by Larry Burkett). This can be very helpful if you have debt you need to get rid of.
15. Pare part of your budget (~2 hours)
If you can spend the time and energy to do a full budget analysis, that's the best thing. If you can't (and most of us can't) then identify the one or two problem areas for excess spending and consciously cut those back. They say a site like can help, but so can pencil and paper or a spreadsheet.
16. Read your tax return (~30 minutes)
If you do your own taxes, you must do this. If you have an accountant, check through the return anyway. Talk it over with your accountant. It's worth your time to know what tax breaks you get (and miss). My tax guy missed almost $1000 in my giving last year.
17. Enroll in a flexible spending account (~15 minutes)
Especially in today's economy, use pre-tax money for medical, public transportation or child expenses when you can. We're using the pre-tax medical. Be careful you don't estimate too high, though; you lose the money you don't spend.
18. Reread your will (~30 minutes or more)
If you have one, make sure it still does what you want it to. If you don't have a will, go make one. Check retirement account and life insurance also.
19. Automate your giving (~5 minutes per group)
If you donate money on a regular basis, go ahead and automate it. We do, just because we want less things to remember every month.
20. Walk a loved one through your affairs (~30 minutes or more)
Make sure someone else knows how to find and handle your finances if you die. Write it down so they don't forget. I still need to do this, actually. This involves having the passwords to all our accounts written down and stored in a safe place (like our safe deposit box). 
21. Ask your cable company for a better deal (~30 minutes or more)
In this age of cut-throat services, check your cable costs. Negotiate for better deals or more channels or both. Or change services. We're still trying to figure out how to dump cable entirely.
22. Ask your wireless company for a better deal (~30 minutes or more)
In the same way, check your wireless costs. We changed services last year when our contract was up, saving over $60/month for both phones.
23. Ask your landline company for a better deal (~30 minutes or more)
Getting redundant, isn't it? It's still worth your time to check with your phone company or even consider dropping them entirely for a cheaper VOIP line. We're working on the MagicJack setup right now. Watch out for the Vonage sale though; they have an inexpensive introductory monthly fee, then it jumps up.
24. Spend your gift cards (~20 minutes)
I'm so guilty of this one. I have expired gift cards or lose them and that's just money down the drain. This is the only one where they recommend spending as a good thing!
25. Check your life insurance coverage (~15 minutes)
You should do this every year as a yearly financial maintenance item.
26. Buy a disability policy (~a few hours)
I have one of these, and also make sure it will pay expenses if I'm badly hurt for a few years. It's worth the time and trouble to do the research and get the policy.
27. Consider renter's insurance (~a few hours)
Obviously this is for renters, but it's a good idea. Check it out.
28. Raise your auto and home insurance deductibles (~30 minutes)
Only raise your deductibles if you can afford it, but it does reduce the premium costs.
29. Do a home inventory (~1 hour or more)
I'll just quote NYT directly for this one "Tour your home with a video camera and record everything you’d want an insurance company to replace. Put a copy of the video someplace safe other than a computer, in case of fire or a hard drive crash. And add up the replacement costs for all of those items to make sure you have enough insurance." It's a good idea. I still have to do it.
30. Read your home insurance policy (~30 minutes)
You should do this before you change your deductibles and after you do your inventory. I read mine, but I needed some strong coffee to get through the entire thing.
31. Shop for new home and auto policies (~a few hours)
It's always worth a few hours to see if you can get better insurance deals. Do this before you change your deductibles though, just to be efficient.

Nobody cares about your finances as much as you do. Do what you can to make your finances better this year.


  1. This had a good deal of advice I've already heard or knew about on it, a small bit that I was not so sure about (investing money before paying off loans feels very scary to me), and a few that I had not thought of (looking for different banks and rebalancing investments are important yearly practices that I haven't had to deal with much in life yet.) Thanks for posting, I enjoyed your insights.

    You asked for help picking investment strategies for good rates of return, and while I'm no expert, and may not know as much as even you do, I have done fairly well in the past two years. $1000 became $1278 over exactly one year, and then $1707 (I deposited $430 in the account) became $1790 over this (very difficult) 9 weeks. I use Scottrade for trading and a couple of strategies for picking mutual funds, which I prefer because I like the idea of never losing all of my money on stocks. When you have as little money as I haven diversification is silly, but obviously it is important once you have any sizable amount. As for actually picking funds, I narrow them down like this:

  2. -Eliminate any that Scottrade does not carry. Obviously this is mandatory if you are low-income and with only one trading company, but otherwise doesn't matter as much.
    -I choose funds with no load, available to new investors, and with no trading cost. This allows me to make trading decisions without concern for what percentage of my investment $7 is ($14 to buy and sell means I have to make fully an extra one percent, and I am not prepared for that gamble.)
    -Obviously funds not open to new investors are useless if you are a new investor.
    -I like small-growth and small-value funds. These shoot for going just over the market value of an index; a fine goal for a retirement fund.

    Once I've narrowed that down, I look for something that looks like a better buy than its Morningstar rating would indicate, or something that has taken a recent and unexpected dip. High past performance and poor recent performance or 10, 5, 2, and 1 year scores of 10% or more are good ways to narrow down funds until you have a manageable amount to watch for 2-3 months. If you track your funds every day (and many of them only update once per day,) you can start to see "oh, tomorrow this will bounce back", or "we had a big day without a preceding bad day, that means I should expect a bad day tomorrow." By following the index your fund follows and your fund, you can start to make predictions.

    For instance, in early December, I thought my fund looked a little inflated, so I sold. In late December, I bought, actually very near the bottom of the dip. I was not *actually* able to buy so close to the bottom of the dip, because Scottrade took three or four days to buy the fund, and bought at the later day's value, which was still good, but not nearly as good. I'm a bit disappointed, but I think this delay may be built in so that mutual funds can avoid day-traders and stay more stable and (for my fund,) representative of their index. I will have to talk to the people at Scottrade, but regardless, I was able to sell on the high side and buy on the low side without much knowledge or time investment simply by watching what was happening and getting an idea of value. By the same token, watch the three, five, or ten funds (or bonds, stocks, commodities, or whatever else you're looking at, if you're looking to diversify) regularly for a couple of months, then make a decision when one of them is at a price you just can't say no to. Most importantly, no matter how far you drop, don't sell mutual funds at a loss, ESPECIALLY index funds. They will almost certainly come back up. at the end of 2012, I had $900 in mutual funds because the fund I had bought three months previous had lost so much money. They gave me dividends at that low price, bringing me almost back up to my input of $1000, and then the price rose back up once the market got over itself, and I made $250 or so by October. The fund I am in is WSCYX if you care.

    tl;dr: I liked your blog post. My investment strategy has done over 20%/yr for 1.5 years, and is as follows>1. Pick a few things you want to invest in. 2. Watch them every day for 2-4 months. 3. Strike when the price is so low you can't stand it. 4. Don't freak out when it goes lower. 5. ???. 6. Profit. 7. If you have the means and time to pay attention to more investments, you should be more diversified. 8. Once you have enough means, paying someone like-minded to pay attention for you may be safer than not diversifying. 9. Be SAFE, and content with 10%/yr increases, rather than looking for 50% or higher ones that are crazy. Recognize lotto tickets for what they are.

    Apologies for being so long! I was very interested in what you had to say. Will read more in the future.

  3. Firstly, thanks for reading my blog post. I do have a few financial ones in here, in the hopes that my children will be able to use the information. Like this post.
    Secondly, I didn't really come up with most of these items on the list. The NYT had an excellent article which I essentially recycle every year so people don't lose it.
    Finally, thank you for the wonderful additional comments on how to invest well. I plan to add a chapter on investing in one of my future books, but everything you say is spot on! This would make a very good independent post! If you have a blog, you should post it. If you'd like to guest post here, that would be great - drop me a note at We'll work something out.
    Debt is a huge issue for most young people, and (sadly) for many older people as well. I don't really recommend investing before paying off debts, EXCEPT if your company has a matching program for your 401K (or other company plan). Then you should invest and get the matching funds, unless the interest on your debt is higher than the match you get. Most companies match at 25-50% though, so I hope your debt interest isn't that high.
    I am against debt. I drowned in debt when I was younger, cause by buying things I could have lived without, but thought I needed. When I was a young man just starting work, an older gentleman living next door to me said "Pay off your house as soon as you can. The entire world changes then." He was right.