Financial Fundamentals

Despite what the market may be doing, it's always a good time for you to get back to basics and focus your mental energies on something you can actually control—your financial fundamentals. Make it your priority or New Year's resolution to put these measures in place to help secure a sound future for yourself and your family.

Track your spending. You'd be amazed where your money goes, and the only way to find out is to monitor your spending habits. On Monday, begin keeping receipts from everything you spend money on—from filling up your car to ATM withdrawals to lunch purchases. On Sunday, sit down and review them to see where your money's going—you may be surprised!

Eliminate revolving debt. Let's say you're paying 18-percent interest on a credit card. From a monetary standpoint, you'll need at least an 18-percent return on your investments just to break even. By the way, that's 18 percent after taxes. Homeowners should look into consolidating that high-interest credit card debt through a home-equity loan. The interest rate is usually much more palatable and the interest itself may even be tax deductible, just like your mortgage.

Create a will. Only 30 percent of Americans actually have a will in place should something happen to them. If you do nothing else this year, pay your attorney a visit and create a will. Don't buy a "kit" and do it yourself, especially if you have a sizeable estate. Remember, life's inevitabilities won't wait until your affairs are in order before they strike. Make sure that your assets pass on to your loved ones the way you intend.

Insure yourself. No one likes to talk about life insurance for the very same reason no one likes preparing a will—planning for your own demise is depressing. But life and disability insurance can protect your family from financial disaster in the event of a tragedy, after you're gone or unable to help them.

Maximize tax-deferred investments. These assets can grow exponentially compared to money in a regular investment account because you don't pay taxes on them until you begin withdrawals. So it makes sense to maximize! Your IRA, 401(k), and 529 plans are all smart ways of keeping money in your pocket and out of Uncle Sam's. If you're not taking advantage of these tax-saving vehicles, start today!

Rent a safe deposit box. They're not just for the rich anymore. Use a safe deposit box to protect important and valuable items, not just jewels, from potential disaster (fire, flood, theft, children, pets, etc.). Safeguard your insurance policies, birth certificates, mortgages, business contracts, beneficiary information, irreplaceable photographs and negatives, invaluable family heirlooms, and so forth.