This was originally published on Monday, November 21 ,2016 in the Pacific Daily News. Click here to subscribe to the PDN.
With just a little over a month left in the year, you may be realizing that you haven’t quite met your financial goals. With time rushing by and the busy holidays upon us, take some time to think about ways to improve your personal financial situation.
- Family report card. Take some time to talk to your family about where you stand financially. Be open and honest. Everyone plays a part in earning and spending the money. Kids are quite receptive and often like to be included in something so important. The family must work as a unit so that they can achieve the goals set for them. Get everyone involved in saving. Make it into a game; the family member that saves the most wins.
- Prepay. If you have the opportunity to prepay your bills — property taxes, medical bills or college tuition — do so. It can mean deductions or discounts. Some may even reduce your taxable income.
- Emergency fund. How much do you have in your emergency fund? Do you have an emergency fund? Many experts say that a healthy emergency fund consists of at least three months’ worth of expenditures. If you don’t have one, start one. Make it a New Year’s resolution. The fund will be helpful when your car breaks down, or if you lose your job.
- Add a little to your mortgage. Call your financial institution and ask if there’s a penalty in paying off your mortgage early. If you have a little left over after every pay period and you are already paying down your debt and putting money aside for savings, you may want to consider adding to your mortgage payment. If you have 20 years and a $150,000 balance remaining on your mortgage, and a fixed rate of 6 percent, you will pay about $107,915 in interest over the next 20 years. When you add an extra $100 payment each month, you shorten the repayment timetable by almost three years and will save more than $18,000 in interest payments.
- Harvest capital losses to balance gains. When you review your year-end portfolio, consider taking some of your capital losses to cancel out your capital gains. Not only will it save you money on capital gains taxes, but it will give you the opportunity to remove some of the lower performing stocks, reset your asset allocation and reinvest in areas you think may have more potential for gain.
- Pay more than the minimum. A minimum payment on a credit card adjusts every month. The minimum payment is a percentage based off your current balance. If you do make charge purchases to the card and your APR doesn’t change, then your balance and your minimum should shrink with every payment. Consider using a fixed payment to pay down your balance more quickly. Do not use the card for six months to a year. Add an extra $20 to $50 above the minimum payment – you will be surprised how much your balance is reduced. Automatic transfers will eliminate a bill payment chore, and the temptation to fall back to minimum payments.
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 firstname.lastname@example.org and read past columns at the Money Matters blog atwww.moneymattersguam.wordpress.com.