Time to make New Year’s financial resolutions | VailDaily.com

Time to make New Year’s financial resolutions

Charlie Wick and Tina DeWitt

Do you remember any of the New Year’s resolutions you made for 2005? If you don’t, it may not be such a tragedy. After all, you still may have had a good quality of life even if you didn’t get to the gym three times a week, learn a new language or take that gourmet cooking class. On the other hand, you can make a big difference in your future if you make – and keep – financial resolutions for the coming year.Of course, as with all resolutions, the financial ones are easier to keep if they don’t force you to radically change your lifestyle. So, with that in mind, here are a few achievable financial resolutions you may want to consider for 2006:• Increase your 401(k) contributions If your salary goes up this year, increase the percentage of your earnings that you defer into your 401(k). With tax-deferred growth, pretax contributions and a variety of investment choices, a 401(k) is one of the best retirement savings vehicles around. Plus, since the money is taken out before it even reaches your check, you won’t really “miss” your increased contribution.• “Max out” on your IRA In 2006, you can put up to $4,000 into a traditional or Roth IRA, or $5,000 if you are 50 or older. If you cannot come up with the maximum amount at once, try dividing your IRA contributions into 12 equal monthly payments – and have the money taken automatically from a checking or savings account.• Pay down your credit card debt As you may know, the Federal Reserve raised short-term interest rates 12 straight times from June 2004 through November 2005. Sooner or later – and probably sooner – these rate increases will affect interest rates charged by credit card providers. So, if you are paying a variable rate on your credit cards, be prepared to pay more in interest. These interest payments do you no good, as you can’t deduct them from your taxes; consequently, you’ll want to pay down this debt as quickly as you can.• Review your investment portfolio It’s a good idea to review your investment portfolio at least once a year. Over the course of 12 months, your life can change in many ways; e.g., new spouse, new house, new child, new job, etc. And if your life changes significantly, your investment goals may also change. But even if your circumstances haven’t changed much in a year, you should review your holdings to make sure they are properly diversified in a way that reflects your individual risk tolerance, time horizon and long-term objectives. A financial professional can help you review your investments to make sure you are still on track.• Avoid last year’s mistakes Everyone makes investment mistakes – but the smartest investors make them only once. Try to identify any errors you made in 2005. Did you chase after “hot” stocks only to find they had already cooled off by the time you purchased them? Did you incur a large tax bill by constantly buying and selling investments? These are the types of mistakes you should seek to avoid in 2006.So, there you have them: some New Year’s financial resolutions that, if followed carefully, can provide you with benefits long after 2006 is over.Charlie Wick and Tina DeWitt are Investment Representatives with Edward Jones. They can be reached in Eagle at 328-4959 and in Edwards at 926-1728.Vail, Colorado

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