As the U.S. economy struggles with slow growth, many Americans worry about their personal finances and resolve to improve their lot in the New Year.
Whether it’s making a budget, saving for a car, investing in a 401(k) or IRA, or paying down a credit-card balance, there are many steps you can take to achieve a more solid financial footing in 2013, regardless of what the overall economy does.
(Photo: Flickr/Quazie)
Two financial experts on JustAnswer suggest these four, in particular:
Set a goal. “You will never achieve any financial success unless you have a goal first,” said Randall Klein, a tax specialist on JustAnswer. He stressed that the goal should be specific, achievable, and measurable.
“Don’t just say, ‘When I have enough, I’ll buy a new car,’” he said. “Rather say, ‘I will buy a Camaro, in 24 months or less, and I will pay cash.’”
Tackle your debt problems. Try to move high-interest debt to lower interest debt, suggested John-Paul Valdez, an economist and finance expert on JustAnswer. This could apply to a mortgage or credit-card debt.
“Try to negotiate a new lower interest rate on debt by asking for it from the creditor, then always pay more than the minimum,” he said. “I have seen loan modifications on cars.”
Prepare for retirement now. “It’s never too late to start saving for retirement,” said Valdez.
He offered this sample scenario: If each spouse saves $100 twice a month in an IRA or 401(k) starting at age 40, the couple would have roughly $275,000 at age 65. Saving half that still would leave you with $125,000, he said.
Keep income taxes in perspective. Klein said he’s often asked about what people can do to save more on taxes, but he believes that’s the wrong focus.
“Stop worrying about the tax tail wagging the income dog,” he said. “Worry about figuring ways to make more money, not about one little thing that can save you $500 at the end of the year.”
But the best way to reduce your taxes, he added, is to meet with a tax professional now about planning your 2013 return — instead of reviewing your 2012 situation.
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