Published by Jonell French/Thomas Davis

7 Resolutions To Fix Your Finances for 2007
Making New Year’s resolutions is easy. You’ve probably made hundreds. Now count how many you’ve actually kept. When it comes to your money, here are 7 resolutions that you can start working on now.

Resolution No. 1: Set Up a System

Any system will work, but get beyond the shopping bag of receipts and shoe boxes of bank statements. Dealing with that mountain of paperwork correctly is critical.
Whether you buy an office-style file cabinet or dedicate a desk drawer, begin by creating these categories so important information will already have a home as it comes in:

Deductible Expenses: Organize your credit card charge slips and receipts for deductible cash expenditures, paid medical bills, property tax bills and charitable contributions. Set up a separate file folder for any category in which you expect deductible expenses.

Banking: This folder is for monthly statements, canceled checks and deposit receipts. At the start of the year begin a new check register, whether there’s room in the current one or not. Put last year’s register in your file. If you use financial software on your computer, print out a year-to-date record.

Investments: Each of your brokerage or mutual-fund accounts should have a separate file folder so you can organize your trade confirmations and statements. You’ll need to keep a long-term record of buys and sells to help calculate taxes in the years ahead.

Tax-Related Items: This folder will hold important papers, such as W-2 forms and 1099 forms that you receive from brokerage firms and mutual-fund companies detailing your dividends as well as gains and losses for the year.
One other crucial step in this process is to make copies of critical records (insurance policies, the house deed, birth certificates) and create a list of important numbers. Gather up your credit cards and list the numbers and expiration dates. Also, list your health-care, auto-club and membership cards. Put all the information in a safe place, just in case. This is also a good time to do a video inventory of your home furnishings for insurance purposes. Take a videotape recorder through your house, commenting on the high-cost items. Place the tape with your other important papers.

Resolution No. 2: Take Stock of What you Own:

It’s easy to access your brokerage and mutual-fund accounts on the Internet. In fact, most 401(k) plans will allow an online download of your investment records. Getting organized is just the start. Now you’ve laid the groundwork for the next step, which begins with the possible painful process of a financial reality check.

Resolution No. 3: Get Out of Debt:

It could be a grim way to start the year, but there is no better time than now to make a complete list of everything you owe. Write down your credit card balances, the interest rates being charged and the minimum monthly payments.
Figure out which cards (those with the highest rates) to pay off first. It may be best to dump the worst of the bunch and switch to a credit card that could help you save money.
Resist the temptation to pay off your credit cards with a home-equity loan or line of credit. You’d only be trading the unsecured loan (used to charge those Christmas presents) to a secured loan with your house at risk if you default. And dipping into your home’s equity again and again can quietly whittle away your investment.

Resolution No. 4: Create a Budget:

Once you see what you owe, you will have little chance to pay off anything if you don’t create a budget. The first step will be to diagnose your financial health. After getting a handle on where your money goes, see how you can reach your new goal of eliminating debt by using the “60% solution for budgeting.” (A simple calculation of limiting all essential spending to 60% of total income. The other 40% is divided into 4 chunks of 10% each for Retirement Savings, Long-Term savings, Short term saving for irregular expenses, and fun money.)

Resolution No. 5: Check Your Insurance Coverage: Find out if you have too little or too much. When it comes to your Homeowner policy, you may have to beef up coverage if you’ve added a room to your house or if you have expensive jewelry or an elaborate collection (porcelain dolls, paintings or comic books, for example.) When was the last time you thought about your auto insurance? You can find online comparison sites easily enough with any search engine.
Life Insurance rates have been dropping, so there’s a fair chance you can save money here, as well. Term life insurance is cheaper but only offers payments after death. Whole life insurance costs more but gives you more ways to use the money in the policy.

Resolution No. 6: Check Your Estate Plan:

This could be as unsettling as investigating your debt, but it’s still a must-do. Though not everyone has or even needs a will, you should still have an estate plan to document your wishes after your death. Strongly consider drawing up at least these three documents:
1) A durable power of attorney for health care
2) A durable power of attorney for finances
3) A living will

Resolution No. 7: Don’t give your money to Uncle Sam.
That doesn’t mean don’t pay your taxes: Just don’t give anything more than what you owe. For the most part it is too late to do anything to cut your 2006 tax bill. Your best bet is to find every deduction possible.
Here are a couple ways to save in 2007:

• Give more to Charity
• Use flexible-spending accounts. Pay for medical and child-care expenses using pretax dollars, which will reduce your total taxable income.
• Maximize your pension or IRA contribution s. Unless tax rates shoot up, you want to pay your tax “tomorrow” rather than today.

7 Keys to Choosing the Right Retirement Community

Continuing care communities with apartments, dining facilities and a wide range of services have become popular because they offer independence. Here’s what you need to know and the questions you have to ask.
Most seniors say they would prefer to remain in their own homes as long as possible. But many aren’t sure how they’ll manage if debilitating illness strikes.
Retirement communities where the available options range from independent living to 24-hour nursing care are the answer for an increasing number of seniors. Choosing the right community, however, can be daunting.
Lyle Larsen saw firsthand what can go wrong when seniors fail to plan for poor health. When Larsen’s elderly parents needed care, they had to leave their home in Portland, Oregon to move in with him in coastal Coos Bay. After his father died, his mother moved back to Portland—only to move again to a nursing home when she could no longer care for herself.
All the moving was stressful and isolating, Larsen said. That’s why Larsen, 84, opted six years ago for a retirement community that promises to care for him if he falls ill.
So called “Continuing care retirement communities” aim to provide just that: a wide range of residential and medical services that can change according to the senior’s needs. Most communities include:
Independent Living Quarters: Usually apartments, although sometimes single family homes – for seniors who need little if any help with their daily activities.
Assisted Living Facilities: For people who require aid to bathe, dress or perform other basic tasks.

Nursing Facilities: For those who need full-time skilled nursing care.

These communities are growing in popularity with aging Americans who want to ensure their future care while living in a place that more closely resembles a college campus or resort than an old folks’ home.
If you think a retirement community might be a good option for you, here’s what you need to know:
Retirement Communities Aren’t Cheap: Most have hefty entry fees that typically range from $20,000 to $200,000 or more, depending on the size and location of the apartment or home you choose. Ongoing monthly fees are usually about $2,000, although the toll can rise if the facility charges extra for medical care.
Included Services Vary Widely: Some facilities provide unlimited medical and nursing home care for the same monthly fees. Others include a certain amount or level of care, but you’ll pay more if you exceed the limits. Still others are “fee-for-service,” with the charges depending on the care you need.
You Should Apply While You’re Still Healthy: Many retirement communities require potential members to pass rigorous physical and mental checks, and reject applicants with cancer, strokes or dementia. Even facilities that accept people who aren’t healthy do so only on a space-available basis, with priority going to their current residents. People who wait until their first health crisis to apply to a retirement community might not get in.
Talk to Residents: Take the tour that’s offered, but also try to stroll around on your own and talk to as many people as you can. A few spontaneous conversations can give you a far better feel for a place that a canned tour.
Review the Contract: When you join a retirement community, you sign a long-term agreement that spells out what you’re paying for, from the size and location of your apartment to how many meals are included in your monthly fee. Items like maid service, laundry and transportation may be part of the package, or you may have to buy them a la carte. Ask for the fee schedule for services that are provided but not covered by your monthly payment.
Is the Facility Accredited?: The Continuing Care Accreditation Commission is the only accrediting agency for continuing care retirement communities. A list is available on the CCAC’s Web site.
What Happens if I run out of Money? Many nonprofit retirement communities pride themselves on taking care of residents who can no longer pay for their care. (They reduce the risk of that happening by requiring financial checks upon application. An example of admission qualification is assets equal to at least three times the entrance fee and incomes at least twice the monthly fees.) Other facilities might throw you out on your ear, or transfer you to a much less desirable nursing home. Know the risks before you commit.

Townsend, Allan, “10 resolution to fix your finances. MSN Money.com 3 January 2007 Pulliam Weston, Liz “11 Keys to Choosing the right retirement community” MSN Money.com 2 January 2007