Top 6 Action Items for the New Year

As 2008 draws to a close, many are hopeful for significant changes in 2009.  Among these is a better economic outlook.  But what can you do now to make way for a better economic outlook?

1. 1. Keep enough cash available.  I can’t stress this enough.  This year has been a record year for layoffs.  Even if you’re not in danger of losing your job, it is still imperative to keep enough cash on hand.  Financial experts recommend having enough cash on hand to cover between 6 and 9 months of living expenses. 

1. 1. Diversify your investment portfolio. In order to have a well diversified investment portfolio, it is critical that one purchase stock in both U.S. and international companies.   Another way to diversity is to purchase investments in large and small companies or fixed income and stocks.  A financial advisor can show you how to properly diversity your investments.

1. 1. Continue to live below your means.  This one is self explanatory. At least I hope it is.  Living below your means does not mean depriving yourself of the good things in life.  It basically encompasses making wiser choices about everyday purchases.  It’s about distinguishing between wants and needs.

1. 1. Pay off expensive debts.  Basically what this means is paying off those high interest rate credit cards.  If you’re having difficulty, your accountant or financial advisor can assist you with coming up with a plan.  Another option is to contact the credit card company directly and ask them to lower your interest rate.

1. 1. Review your credit report. This is a high priority especially if you are considering refinancing your mortgage.  Mortgage rates are at an all time low.  Even if you are not planning on refinancing, reviewing your credit report on a quarterly or annual basis is a good habit to create.  Check out www.annualcreditreport.com for more information on how to obtain a free copy of your credit report.

1. Create a budget and stick to it. Even though I listed this topic last, it does not mean that it is the least important.  As I mentioned in a previous blog, budgets build discipline.  I always encourage everyone to create one.  Not only will you see where your money is going, you will also see how much you have left for savings.  If you need help creating and sticking to a budget, be sure to reach out to your accountant or financial professional.