Pimp Your Finances

The winter of despair is finally ending, and it seems like a spring of hope and optimism could be on the way. Even if it’s not, now is a great time to make sure our finances are in order.

Here are a few things I’m going to be working on over the next few weeks to make sure that I’m ready for whatever lays ahead.

Take another look at my goals and priorities

I recently decided that I’m trying to take on too much at once. I’m trying to build an emergency fund, a vacation fund, pay off all my debt by the end of the year, and I’m about to start a 401K. All at the same time

To tell the truth, I don’t think it’s sustainable. I have two options – I can either drop some of my goals (not going to happen), or I could change some of my schedule.

I’m not paying any interest on my credit card debt, so I could extend my timeline. Instead of paying it all off by the end of the year, I could just pay it before any interest is due. It would help me meet my other goals, at no extra cost to myself.

Start a Roth IRA

This is my biggest financial mistake I’m making right now. I need to start one ASAP. I’m missing out on the power of compound interest and tax free growth, not to mention a down stock market.

Re-tool my monthly budget

My budget is a work in progress. I’m constantly tweaking it and adding things. If I’m going to be changing my goals and adding in another big expense – Roth contributions – I need to make sure I have a budget that can handle everything, and is still flexible enough to allow for things like vacations and home improvement.

Adjust my tax withholding

I got a big refund last year, which sounds fun, but is really money lost. I gave the government an interest free loan. I should try to adjust my federal withholding so that I get a small return instead.

Re-balance my 401K

This has nothing to do with how the market has done recently. It’s about making sure that my 401K is still balanced in the way I intended.

Some of my funds may have done better than others, so I need to take a look and see if I need to change future contributions to bring things back in line.

It’s also a good time to make sure that I’m taking advantages of the low-expense funds that are available in my account.

Why now?

In spring, warmer weather gives us a chance to get a head start on our yard work before everything starts growing, and it’s even harder to manage.

The recent downturn in the economy has given us a chance to make sure we’re ready when everything finally does turn around.