New Year, New finances

Were you better off last year than this year? If the answer is No, or you don’t know the answer, you’ve got some work to do.

A study by Princeton Research Associates shows that, for all income levels below $100,000, people with a written financial plan report twice as much savings and investments as those without a plan.

Here’s how to make yours:

1. Find where you are now:
– What is your net worth (what you own less how much you owe)?
– How much debt do you have? Take a brave look at debt and interest rates.
– What are your financial goals, and how can you reach them?

2. Lower your interest rates.
If your job is secure and you are in good health, it could be wise to take a home equity loan at a lower interest rate to pay off high-interest consumer credit accounts. Though rising, equity loan rates are still less than credit cards.

3. Blast your debt.
Don’t charge anything. Talk to a credit counseling agency if you can’t pay all your unsecured debts in three to five years.

4. Check your progress.
You will be encouraged to see your total debt reduced each month.

5. Track daily expenses.
Monitor every penny you spend for 60 days. You are sure to find items you don’t really want or need.

6. Plan for disaster.
Check your home, auto, and health insurance to ensure adequate coverage.
Put money into an account for emergencies. Aim for three months of living expenses, but save what you can.

7. Avoid temptation.
Stick to your plan, not your pal’s vacation schedule.