Debt Free

Well, it's time to see how you're doing on your road to debt freedom and financial security (not to be confused with each other); time to take a financial inventory, so to speak. You can make a realistic assessment of your assets and liabilities with an eye toward revising your financial plans for the coming year.

1 – Financial Goal Evaluation – Evaluate your goals vis-a-vis your finances. Are they still realistic? Maybe they're actually a tad conservative, or you could have set your sights just a bit too high. Personally, I think that setting your goals on the ambitious side is a good thing. If you miss your targets by just a little, you're still doing better than if you set your goals much too low and exceeded them. If becoming completely debt free is what you're after, how are you doing? List all your credit cards and other credit accounts(you should have them listed already if you're using the 'roll up' debt reduction strategy) and compare them to last year. Is there an improvement? If not, why, and more to the point, what can you do about it? Are your financial goals realistic, or is a revision in order?

2 – Debt Evaluation – Look at all your debts closely. Pay particular attention to your credit card accounts and store charge cards. You should do this every month, but if not it's time to do it as part of your year end financial review. Look at the interest rates and balances. If you are killing off one credit card at a time, it's easy to kind of forget about one of the others, especially if you've stopped using it. Make sure the interest rates haven't been raised on you. This is important. A small percentage adjustment in the interest rate can end up costing your big time over the long term. Make sure you haven't been charged any unwarranted fees either.

3 – Debt Restructuring - This is not to be confused with taking out a debt consolidation loan, although that is a valid option for some. I'm talking about attempting to get the most advantageous debt terms for yourself as possible. Go through your credit cards one by one. Call your creditors to see if you can get an interest rate reduction. Begging, pleading, and other forms of persuasion go a long way here. If your husband or wife is better at these kind of tactics, let them make the phone calls. Pull out all those dead trees you've been sent recently. You know, the ones with the balance transfer offers on them. Look through the offers carefully. It's possible some of them would be worth doing. You can get out of some of your high interest cards and pay little or no interest. Be careful though, as I've addressed before in other posts, not all of these balance transfer offers are the great deals they may seem on the surface.

4 – Tax Review – Now is about your last chance to make any changes that may improve your tax picture for the year. Any donations to make? Leave that bag on the front porch. It's time to write that long promised check to your alumni association. Watch out though, they'll send you even more letters now! Your taxes are just another debt you need to address. Look at all you investment accounts and real estate holdings, then consult your tax professional now, before the last weeks slip away amid the holiday rush.

Hopefully you've done well this year on your path to debt freedom and financial security. Now's the time to make sure. Although you've probably got a million things to do, what with parties, shopping and all the other distractions of daily life, it's important you get on with your year end financial review, before it's too late.