Yes, you can become fiscally fit in 2007!

From Paul G. Provencher, CRPC Special to PRIME So one year is over and another begins. What did you get accomplished last year in your financial life? Not enough you say. Well let's talk about a plan to accomplish more in 2007 than you did in prior years. How do you do it? Decide to set some goals and resolve to act on them. Then just do it. There is no better time to start than the present. The following is a list of Resolutions you can decide to enact and change your financial life. Your 'get-fit' financial plan Complete a Financial Inventory: Collect the key data needed to complete an inventory of all your financial assets and obligations (short and long). This would include the money you have in your checking, savings and money market accounts, certificates of deposits (CDs), stocks, bonds, mutual fund accounts, life insurance cash values, annuity values (fixed or variable). Assess the value of your home, additional properties you have, any business interests, furnishings, automobiles, art, jewelry, etc. This will provide your total assets. Then you need to list your liabilities such as your home mortgage, equity line of credit, auto loans, business loans, personal loans, credit card and charge card debt. These will provide your total liabilities. Subtracting your liabilities from your assets will provide you a total net worth. Now you'll have a better idea of where you stand in the future. This can be updated yearly. Pay Yourself First: With every paycheck, the first bill you pay is to yourself and your future. Your first commitment should be to put funds into your savings and retirement accounts first. Then the remaining funds can go to pay bills and for discretionary spending. Whenever your paycheck increases such as with a pay increase, a portion of the increase is to be dedicated to the savings and retirement accounts. If you got a $30 a week raise, you should add $15 a week to your savings and retirement plans. Doing this will allow you to see dramatic increases, in the future. Establish a Safety Net Account: Calculate how much it would cost you to live if you lost your paycheck or source of income for 3 months. Included would be the mortgage payment, car payment, insurance payments, food expenses etc., but you won't need to include your social security tax or 401-K contribution. This money should be kept in a liquid account such as a savings or money market account and used only in emergencies. After Hurricane Katrina, many people wished they had followed this advice. Analyze Your Tax Situation: Review your tax returns from past years to see if you've left too much money on deposit with the government. If you consistently get a large refund, you are allowing the government to accumulate interest on your money and you've lost access to the use of this money. Do you pay taxes on money locked up in a certificate of deposit? If so you could consider using a fixed annuity which may give a fixed, guaranteed return, for a set number of years while deferring the taxes due until you annuitize and begin taking distributions. Are you taking all your legitimate tax deductions? Have you filed properly for any capital gains or losses in the last three years? Have you kept up with the changes in tax laws well enough to be able to be certain? You might want to consult with a tax professional for assistance in completing your return to be sure its complete to your advantage. Simplify Your Financial Accounts: You can consolidate similar types of accounts and avoid another year of paperwork, avoid some fees and simplify your accounting. You may have two or more IRA accounts in your name. Most of these investment companies or banks charge a fee of from $10 to $40 a year. Some investment companies waive this fee if accounts in your name or family name exceed a set dollar amount. If you wait around for another year, you'll just get more paperwork and probably pay more in fees. Some companies actually reduce your fees if you accept account statements via the internet. Yes, there is some paperwork involved in making the changes, but your tax preparer, accountant or financial advisor can help you with completing this task. Review Your Retirement Plan: You had better do this every year since planning for your retirement is a necessity. You need to plan since you'll meet a few financial challenges along the way. You'll need to get ready for lifestyle changes, such as your child needs your financial assistance in their college years or your parents need help in their retirement years. How will you adjust if inflation is higher than the current 3 percent average for a period of four or five years? That could seriously impact how much you'll need to save. Do you maximize the 401-K contribution at work? Should you consider opening a Roth IRA which will give you tax free distributions at retirement? Make a Charitable Gift: Many people are generous to charities but they also need to ensure that the charity is a qualified organization and that you keep proper and accurate records. These contributions may take the form of a check as a donation, memorial contribution (in memory of a loved one or friend) or the transfer of stock certificates or mutual fund shares, a usable auto or household items. You are able to reduce your taxes by making these contributions and feel good about assisting someone else. If you find this overwhelming or difficult, work with a financial advisor who can help you articulate your goals and assist in assembling a plan. Having no plan means you have no place or direction to go. So how will you know when you get there? We wish you a wonderful New Year. Paul G. Provencher, CRPC, is located in Wilbraham, MA. Financial information is available by calling Paul at 413-596-0000. Paul Provencher is a Registered Representative of and offers securities and investment advisory services through MML Investors Services, Inc., Member SIPC 1500 Main St., 12th floor, Springfield, MA. 01115, (413) 781-6850. # 086519-000