Year-end review can help you assess your needs

This was originally published on Monday, December 16, 2013, in the Pacific Daily News.  Click here to subscribe to the PDN.

A year-end review is an excellent time to start thinking about what financial goals you want to achieve next year and to see how you are progressing on your long-term financial goals.

Success on short-term goals eventually leads you to your financial freedom. There are always obstacles and surprises in life and your short-term goals must change with them. Here are more end-of-the-year reviews you should look at:

• Health insurance. Your health insurance is usually reviewed when your policy needs to be renewed. But if you had major life changes or health issues, start reviewing it now and monitoring what changes you want to make. If you feel that you are over-insured, talk to your provider about a policy that suits your needs and save some money.

If you are married and have children, investigate which insurance policy, yours or your spouse’s, provides the best coverage for the best deal and carry your children on that policy.

If you plan on switching providers, take time to read and understand your new policy and be sure to cancel any automatic payments.

• Life insurance. Life insurance helps your family in the event something happens to you.

Most underwriters offer the same benefits. Once again, if you had a life or household change last year, you want your policy to reflect that. Check to see if any of your risk factors, such as age, health or lifestyle will increase the cost.

If your life insurance is tied in with your mortgage so that your mortgage is paid off in case you die, be sure to inform your insurer of any changes or arrears in payments. Be as honest as you can when completing questionnaires.

• Mortgage. An income change within the year is undoubtedly a reason to review your mortgage.

If you are earning significantly more due to a change in position, job or raise, then you may want to consider paying more towards your mortgage.

Paying off your mortgage ahead of schedule helps reduce the amount to interest you pay the bank.

If you are losing income, talk to your bank right away before you are in arrears. Most banks are willing to work with you to find a more manageable payment schedule or even refinancing your loan. Interest rates still are relatively low; shopping around for a new mortgage can save you hundreds if not thousands of dollars.

• Credit cards. Review your credit card usage and payments. How much are you paying annually? How much interest did you pay this year? Do your rewards have a certain timeline in which they must be used? If your card has a large balance on it, what are you doing to pay it off?

One thing most people don’t consider but can add up is cash advances from your credit card. These transactions usually have a higher interest rate. Not using the card-issuing bank’s ATMs can cost you anywhere from $3 to $5 per transaction.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 20 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

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