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What's
Your Oulook for '05? Will you thrive, survive, or take a dive in ’05? The answer depends on you most of the time, and planning can make the difference. Plan for what can go wrong — disability, death or serious heath problem; that’s your disability coverage or long-term care insurance, life insurance, and health insurance. After you have those issues covered, set goals for success. What follows are just a few thoughts for the new year. Would this be a good year to begin teaching financial values to your children? You can prepare them to be responsible adults by showing them how to save and spend. Even four- and five-year-olds can understand the power of money. Allow them to deal with money matters by having an allowance tied to certain age-appropriate chores. Give your child opportunities to earn extra money and encourage them to save for what they want. Have your child with you when you make regular deposits to your savings account, let them participate with you as you pay family bills, and include them in discussions about major purchases. For the teenager, the cell phone they use will most likely be a big added expense if you do not have enforceable ground rules. Start out with cards that you buy that have a certain number of minutes and that’s it. Only if they are responsible with those minutes should you purchase a plan that allows them to go over the planned minutes. Family plan minutes can be particularly difficult to keep from getting into the expensive talk time; if just one person goes over, everyone on the plan is then also over, usually without realizing it. Cell phone charges can get up into the hundreds of dollars every month. When cell phones came out everyone thought it was reasonable to have one and their children to have them because of emergencies that might come up; now they have evolved into a very expensive necessity. If you find your young adult children moving back in with you because of a weak job market and high housing costs, be sure that they participate in sharing the household expenses. Would this be a good year to evaluate whether two incomes are better than one? It certainly seems like two incomes would make things easier financially, but a close look may tell a different story. There are hidden costs, like being pushed into a higher tax bracket. There is also the childcare cost to consider if your children are young. Maybe there is a grandparent who is willing to help out, but in that age group (of which I am a part) there is a clear understanding of why God gives children to the young folks — one weekend with my grandson, as adorable as he is, leaves me exhausted. Even if you are coming out ahead financially with two incomes, be sure to weigh in the emotional drain of both adults having careers to maintain while trying to raise this country’s next citizens. Would this be a good year to get debt under control?
Debt can be necessary to purchase an asset that will appreciate
in value — a home or business, for example. In some cases the
interest on this debt is deductible. Credit card debt, or debt resulting
from purchasing assets that are likely to depreciate in value, should
be brought under control and eliminated if possible. The interest
on this type of debt is not deductible. Start by cutting up the
cards and paying off the credit card with the highest interest rate
first. If you are accustomed to carrying a credit card, switch to
a debit card; you will enjoy the same convenience without adding
to your debt. In my book (yet to be written!), freedom from debt
is at the top of the list. In this fast-paced world, we have enough
to shoulder without the extra burden of credit card debt. It puts
a strain on our most important relationship — that being with
our spouses, if married, and our families. Make it one of your goals
(if you have credit card debt) to pay off those cards and then after
they are paid off keep making those same payments into your retirement
plan. This will add years to your life! May all of you THRIVE in
’05! The Hart Group, Inc. |