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Baylake Bank Offers Summertime Tips to Help You Keep Your Cash Cool

June 24, 2009 - It’s finally starting to feel like summertime, so staying inside with your finances might not sound like a very exciting option. But a midyear review of your tax situation, retirement funds, and spending can be far more valuable than the rushed attempt most people make at the end of the year—or when it’s too late at tax time.

Summer’s actually a good time to do this task because there’s still enough time to correct lapses in savings, spending, or tax planning. Here’s what most people should cover:

Retirement savings: Given the state of the economy, it’s not a bad time to review your retirement funds and your current investment allocation. If you are on schedule to max out your contributions to your company retirement plan this year, great. But don’t forget to check your existing IRAs and other retirement accounts to see if you’ll have enough cash on hand to contribute the maximum in each account by their respective deadlines next year.

Health and health insurance: Increasingly, what we pay for health insurance will be tied to the state of our health, so when you finish your financial review, get outside and get some exercise! Many insurers reset premiums at mid-year in a rising cost environment, so make sure you’re ready to switch plans or negotiate different coverage if necessary during open enrollment in the fall.

Taxes: If you received a sizable refund in April, or on the other hand, needed to empty your savings to pay Uncle Sam, it’s definitely time to reassess what you’ll owe at tax time next year. Also, if you think you’ll have some losing stocks in your taxable investment accounts, keep an eye on those in case you’ll want to offset gains in your portfolio at the end of the year.

Spending: Either on your computer or on paper, take the time to figure out where your money’s going. A look at the last six months of spending may reveal opportunities to reduce spending and redirect money toward important goals. Be sure to take a look at such things as gym memberships, magazines that are piled up, and coffee expenses. Many of these things are extras that present a savings opportunity with minimal effort. Working through your budget may help you pin down a surprisingly large amount of money that was unaccounted for, and that could be redirected to debt payment, savings, and investments.

Reserve fund: Most financial experts encourage you to have between three and six months of living expenses in an emergency fund. If you don’t have that minimum, go back to your spending review and see where you can start socking money away.

College savings: Whether you are saving for your child’s education or your own, check to see if you’re on track with the goals you made for the year. It’s also a good idea to read the latest news on financial aid since schools change their financial aid policies annually. Even if your child is still in grade school, it’s a good idea to learn as much as possible about college financing while you’ve got plenty of time to learn.

Special goals: If your car is on the decline, or if this might be the last year for your furnace, see if you can direct more money into a reserve fund to cover replacement costs, or at least a heavy down payment. If there’s a vacation you want to take by the end of the year or a special household purchase you want to make, focus on the cash you’ll set aside to make that happen. Of course, if you have credit card debt rolling over from one month to the other, paying that down should probably be your initial focus.

Credit: If you haven’t set a schedule for receiving your three credit reports throughout the year, do it now. You have the right to get all three of your credit reports – from Experian, TransUnion and Equifax – once a year for free. You can do so by ordering them at www.annualcreditreport.com. By staggering receipt each of your credit reports at different points in the year, you’ll get a continuous picture of how your credit picture looks. Also, you’ll have the opportunity to focus on possible errors in a single report, which will give the other two credit agencies time to update their files.

This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Inge Bacon of Baylake Bank, a local member of FPA. Baylake Bank, Member FDIC/Equal Housing Lender, serves its communities from 28 financial centers in Brown, Door, Green Lake, Kewaunee, Manitowoc, Outagamie, Waupaca, and Waushara counties and from its website at www.baylake.com. For more information call (920) 743-5551 or 1-800-267-3610.