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December 2005 |
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Looking Back at 2005 …The Five Essential Questions for the Year in Review If we can pull you away from the eggnog and mistletoe for a minute, let's take a look back at 2005. Here are five essential financial questions to ask yourself when sizing up a year in which so many of us struggled to stay on a budget. By the way, you'll probably be asking these questions at the end of 2006 as well, so might as well face up to them now. Am I finishing the year with the proper insurance coverage? If you're like many of us, you know your car insurance, health insurance or life insurance needs adjusting but you put it off. Did you get to it this year? Insurance needs are always changing. Perhaps it was something dramatic like adding a baby to the family or something less exciting such as your car reaching an age where it makes no sense to keep paying for collision coverage. If you haven't done it in a while, make sure you pull out your policies and look at your levels of coverage. The need to protect yourself against financial disaster makes this one of the five essential question Do I know where my credit stands? Debt Matters has mentioned once or twice this year how important it is to check your credit. The only person who can detect an error on your credit report is you and some studies say 80% of credit reports have errors. Plus, checking it regularly is a great way to find out if you've been a victim of identity theft. And nowadays checking your credit report is easier than ever. You can get the ball rolling right now. Visit www.AnnualCreditReport.com to find out how. Did I reduce my debt? There are some very good reasons for increasing your debt. Perhaps you bought a home or you took out loans to pay for yours or your child's college education. But if you increased or merely treaded water in terms of your credit card debt, it's hard to call 2005 a financial success. But if you whacked away at it, cheers! You'll pay less in finance charges next year and are on the way to financial health. Did I save enough? How much is "enough" depends on what your goals were. For many of us, saving anything is cause for celebration. And some of us threw all our energy into slashing debt. Others use the 10% rule (saving 10% of your salary). Consider the year a financial success if you met your savings goal. If you didn't have a goal, just be sure to start 2006 with one on paper. Did I position myself to do better next year? Sometimes our goals aren't realized in accordance with the 12-month calendar. But that doesn't mean progress wasn't made. Perhaps you got a raise or promotion that means in 2006 you'll have the income to save for a home or an emergency fund. Perhaps you got your degree which will enable you to move into a higher-earning career. These are the kinds of things that can make a year a financial success even if the balance sheet says otherwise. The pay off is just on layaway until 2006. |
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