You are four days into your resolutions. How have you done thus far? Have you made any significant changes to your finances?
Get Organized and Clean Financial House
Every situation is different, but here’s what I’m doing to prepare for 2010.
Shred Old Documents
We keep all sorts of important documents throughout the year. Sometimes we hold them much longer than that — conventional wisdom says to hold onto tax documents for 7 years. (That’s a long time.)
As we get to the end of the year we get to enjoy going through a massive pile of documents to decide whether or not we need to continue to keep them.
If we keep them they go back into the filing cabinet.
If their end is nigh we shred them. We bought an 8-sheet shredder (like this one) several years ago just for this task. Shredding your documents increases the security around your documents because, obviously, it is much more difficult to piece together the pieces of information when they are the size of confetti.
Any information sent to us via mail that has account numbers or any sensitive information goes into the shredder when we’re done with it.
In case you were wondering… yes, shredding documents is very satisfying. (At least until it jams like ours did last week!)
Reviewing Our Budget and Long Term Financial Plan
If you’ve just started reading my blog let me get this out there: I love budgeting. My budget is on a spreadsheet (unlike the pen and paper above) and is 51 lines long.
Yes, that is very specific.
No, your budget doesn’t have to be that specific.
Hopefully you are already living on a budget. (If not, get started on that RIGHT NOW.) The new year is a great time to sit down with your family and review everything.
Some questions you can ask during your budget review:
- What major expenses are coming up this year? Check your progress toward those expenses, or, if you hadn’t planned for them just yet add those to the budget.
- What goals are 100% funded? Assuming you’ve saved up for those goals on a monthly basis, congrats. Since you’ve saved up completely for one goal that frees up money for you to budget toward other goals. Don’t forget this step. Achieving one goal is great, but make sure you roll that monthly money toward a new goal.
- What adjustments do we need to make? What worked last year? What didn’t work? Make adjustments now.
Gather Tax Documents
Tax day is April 15. You need to start gathering tax documents now in preparation of filing. Some of the following items you will receive via mail (so you may have to wait a few weeks), but here’s a short list to get started:
- W-2s from employers
- 1099s from banks, contract work, and dividend payments
- a list of your charitable donations and receipts for those donations
- any other applicable deductible expenses and their appropriate documentation
Create a New Tax Folder
While you are digging around in your 2009 tax folder, why not go ahead and make your 2010 tax folder? It will take you just a few minutes, but gets your organization for 2010 off to a great start.
How are you preparing to get radical and dominate your finances in 2010?