General Advice For Money

To-Do List for Fine-Tuning Your Finances
Staying on top of your bottom line
Published: July 09, 2008

Any time is a good time to prioritize your financial goals and begin taking steps to achieve them. Here are suggestions to consider for your financial to-do list.

Address any problems
If you're having problems making loan payments or meeting other financial obligations, get help as soon as possible. Recent news reports have focused on people at risk of losing their homes because they had adjustable-rate mortgages that were resetting at higher, unaffordable monthly payments. But even in the best of economic times, people can have trouble making ends meet, especially after a job loss, divorce, or separation, or a death or illness in the family. The most important thing you can do is address the problem.

"A financial crisis doesn't happen overnight," notes Eloy Villafranca, a community affairs officer with the FDIC. "Unfortunately, many times people don't see the warning signs until it's too late and they face the prospect of spending several years getting back on track."

If you answer "yes" to one or more of the following situations, you could be in danger with debt:

You will be unable to make your mortgage payment.
Your credit cards are close to or over the limit.
You can only pay the minimum monthly amount due on your credit cards.
You are borrowing money to pay some of your monthly bills.
You have started working overtime or a second job just to cover food, housing, and other basic living expenses.


When it comes to a problem paying an existing loan -- whether it is a mortgage, a credit card, an auto loan, or any other substantial debt -- contact your lender as soon as possible, preferably before you miss any payments. "Explain your situation and indicate your interest in continuing to make payments to avoid defaulting on your loan," says Janet Kincaid, chief of the FDIC's Consumer Response Center. "Lenders would much prefer to work with a borrower on a new repayment plan than have to foreclose or repossess a home or a vehicle."

Find ways to spend less and save more
Many experts suggest that consumers get a better handle on how much they're spending, and where, by keeping a log of their expenditures for a one-month period. "Do your best to write down every purchase, even all those sodas from the vending machine," explains Villafranca. "You may be surprised to learn how these expenses, even the small ones, can add up." Among the areas he says you may be able to trim back are restaurant meals and premium TV, Internet, or phone services you really don't need or use.

Also consider ways to pay less for banking services, added Kincaid. Examples she cited: Pay as much as you can on your credit card each month -- pay in full, if possible -- to avoid or limit interest charges. Pay your loans and other bills on time to avoid late fees and damage to your credit record. Order a free copy of your credit reports (start at http://www.annualcreditreport.com/) and correct inaccuracies that can keep you from getting the best interest rate on a loan or credit card. Whenever possible, use your own bank's automated teller machines to avoid fees charged for using another institution's ATM. Also comparison shop for financial services the way you would for any purchase.

By reducing expenses, including avoiding unnecessary fees, you'll have more money available for savings and investments to support your future needs, including long-term goals such as retirement. Given the inevitable ups and downs in the stock market, it's also important to review your portfolio -- your mix among stocks, bonds, mutual funds, savings accounts, CDs, (certificates of deposit) and so on -- to be sure it's well-diversified. "It's your money, so you've got to be proactive in protecting it," says Kincaid.

Simplify your financial life
Examples include signing up for direct deposit of your pay and benefit checks and other regular income, having a certain sum automatically transferred each month to a savings or investment account, and exploring banking and bill paying by phone or online. These services can help you save time, reduce stress, lower the fees you pay, and maybe earn a little extra on your savings and investments.

Also consider arranging and updating your financial files to help you and your family locate important documents (such as wills and insurance policies) in an emergency.

Review your insurance coverage
About once a year, make sure you have enough insurance without over-insuring or paying too much. This periodic checkup is especially important if there's been a big change in your life -- such as a marriage, a new child, or a change in employment -- that could result in a need for more health, life, or disability insurance (to replace lost income during a serious illness).

"Also look at your homeowners insurance -- what it covers, what it doesn't -- especially if you've recently added a new room or made other major improvements," Villafranca says. "This is crucial, because if your home gets severely damaged or destroyed, you will be very sorry if you didn't carry enough insurance."

Be on guard against financial fraud
"Con artists are very creative and unscrupulous when it comes to thinking of new ways to steal money," says Michael Benardo, manager of the FDIC's Financial Crimes Section. "Consumers need to understand the warning signs and be on the lookout for fraud involving loans, checks, credit cards, ATMs, the Internet, and other bank products and services." Here's what Benardo says are some of the best ways to protect against financial fraud:

Review your bank statements to spot unauthorized withdrawals.
Get copies of your credit reports (www.AnnualCreditReport.com) and look for loans, credit cards, or other accounts that an identity thief may have opened in your name.
Be wary of requests to divulge personal information -- especially your date of birth, Social Security Number, bank account information, and your mother's maiden name -- in response to an unsolicited call, letter, or e-mail, no matter how official it may look.
Before disposing of documents with personal information, use a crosscut shredder that will turn the paper into confetti.
Beware of offers or prizes that seem too good to be true -- for example, you are told you won a lottery you never entered or a stranger sends you a big check by mistake -- and you are pressured to wire money back to cover "fees," "taxes," or some other (fraudulent) purpose.


Stay informed about finances
"Being an educated consumer of financial services is analogous to staying on top of the latest in technology; even if you think you know the basics, things are changing all the time," says Luke W. Reynolds, chief of the FDIC's Community Affairs Outreach Section. "With so many new options for saving and borrowing money, and so many potential pitfalls to avoid, not keeping up with the changes can adversely affect your pocketbook."