Global uncertainty, volatile markets and elections are out of your control, but there many things you can do to control your financial destiny. As we start the second half of 2016, here’s a checklist of tasks that will put your finances in better shape and make you feel virtuous for having completed them.
TRACK YOUR MONEY In the age of easy-to-use apps like Mint, Digit and Level Money, not to mention bank apps, there is no excuse for not getting a handle on what’s coming in and what’s going out!
ATTACK YOUR CONSUMER AND STUDENT LOAN DEBT Create a list of outstanding debt and divide it into two categories: consumer (credit card/auto) and student loan. Put the highest interest rate debt at the top, followed by other loans in descending order. Attack the highest-interest loan first, and after you whittle it down, shift the money toward the next-highest one.
CHECK/REPAIR CREDIT About half of Americans (46 percent) say they have checked their credit score within the past year, according to a Bankrate.com survey. That is simply crazy — you need to know what’s on your report and your score before you try to borrow money to buy a car or house. Go to AnnualCreditReport.com to review/correct your report and be persistent — it can often take time and energy to have errors removed.
REFINANCE YOUR MORTGAGE Mortgage rates are flirting with near four-year lows, while house values have increased. That means that a lot of homeowners who may have been unable to refinance may now qualify.
REVIEW YOUR INSURANCE Don’t wait for a natural disaster to occur before you review your homeowner’s policy. The three biggest mistakes are under-insuring, shopping for price only (not comparing apples to apples), and not reading policy details. Also, check to see if you have at least 20 percent equity in your home — if so, you may be able to drop your private mortgage insurance (PMI). Auto insurance: If you have an old car worth less than $5,000, eliminate collision and comprehensive coverage and increase deductibles. You may be able to earn discounts by purchasing car, homeowner’s and umbrella liability insurance coverage from one company. Life insurance needs often decline as you age, so you may be able to get rid of an old policy or consider replacing an expensive policy with a cheaper term one.
CHECK YOUR PROGRESS ON RETIREMENT SAVING Still haven’t calculated your number? You are not alone. According to the Employee Benefit Research Institute’s Retirement Confidence Survey 2016, fewer than half (48 percent) of workers report they and/or their spouse have ever tried to calculate how much money they will need to have saved so that they can live comfortably in retirement. Go to your retirement plan website or use EBRI’s “Choose to Save Ballpark E$timate.”
REBALANCE YOUR INVESTMENTS The fallout from the Brexit vote was a good reminder that markets can suddenly fluctuate. The end of the quarter is the perfect time for long-term investors to rebalance accounts so that allocations remain in check. If possible, choose auto rebalancing so you don’t have to worry about the direction of markets or when it’s time to reallocate.
DRAFT OR UPDATE YOUR WILL! I advise hiring a lawyer to prepare a will, power of attorney and health care proxy/living will. If you insist on doing it yourself, you can use a software program like Quicken WillMaker. All of your estate documents and final instructions should be stored in a safe place — don’t forget to provide copies to your executor/trustee. Those with larger estates, or who want more control over the disposition of assets, may consider a revocable or changeable trust.
Jill Schlesinger, a certified financial planner, is a CBS News business analyst. She welcomes emailed comments and questions.