Here is a list of seven ad-hoc suggestions, any one of which could make you feel better as we bring 2007 to a close and move boldly into 2008:
- Help a senior (and yourself) by having a durable power of attorney and living will prepared for him or her. Often neglected until the last minute, when it is usually too late, these basic estate planning documents are crucial to insure the immediate ability to care for a loved one. In our experience seniors generally breathe a sigh of relief when these documents are in place.
- Pull out your own will and review it for currency. You may be surprised to find that some of your choices from a few years ago have become outdated and require revision. Executors and guardians move away, pass away or might no longer be sensible choices. Divorces occur. Children are born. All of these events can change your plans.
- Look at your property insurance package – homeowners’, auto and umbrella. (What? No umbrella? A $1,000,000 umbrella liability policy costs only a few hundred dollars per year!) Check your deductibles on all vehicles. Sometimes raising your deductibles makes good economic sense. Eliminate comprehensive and collision insurance on older, less valuable vehicles. Make sure that the value of your house and its contents are accurately reflected in your homeowners’ policy, bearing in mind that the value of the ground that your house is built upon generally should not be insured. Consider replacement cost coverage and an inflation rider.
- Look into pet insurance. Pet lovers are finding out that veterinary costs can be surprisingly high (often more than human costs!) when compared to the cost of initial purchase of a pet. Contact your veterinarian to determine the most reputable carriers and the types of coverages they would recommend for your particular pet. Different breeds have different needs!
- Look at your year–end tax picture now, while you still have time to plan. As of this writing the stock market is in a down pattern, suggesting the chance to take losses by selling before year end, assuming you have gains you wish to offset.
- Force yourself to save more by increasing your retirement savings deduction. If you have a 401(k) plan, try to max out your contribution or at least increase it (maximum total contribution for 2007: $15,500.) This will reduce your current taxes, allowing more of your money to begin growing now, and the growth is not taxed until many years down the road when you will probably be in a lower tax bracket. (Remember that you can still borrow back a portion of your account, and in the case of 401(k) and IRA accounts, withdrawals can be made without penalty for certain medical and educational expenses and certain expenses for first-time home buyers.)
- Review and restructure your debt. If you have significant credit card debt you are probably paying interest at an exorbitant rate. If you can discipline yourself not to rack up new credit card debt it is probably better to consolidate your existing credit card debt into a single loan, such as a home equity loan or line of credit. There are still good interest rates out there but for this type of debt consolidation to work you really have to cut up those excess credit cards and retain only one or two major credit cards to be used for emergencies or as debit cards that you pay off every month. All it takes is discipline.
– BBC&B