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Danisha Danielle is an LA-based real estate broker and personal finance expert. As the end of the year approaches, many people are vowing to finally clean up their finances in 2013. She will share with our viewers her tips for actions to take before December 31st in order to get your money in shape for the New Year.
GET STRICT ABOUT HOLIDAY SPENDING.
It’s easy to get carried away and go crazy shopping this time of year. That is exactly how you get off to the WRONG foot with your finances for the New Year. This is especially true for those of us that are procrastinators and wait until the last minute. It’s as if suddenly there is this guilt that you have to spend large amounts of money. The stores try to capitalize on that with last minute markdowns and offers for store credit cards. Those store credit cards then give people an excuse to spend more money they don’t have.
Here’s some advice for those still doing their shopping. Make a budget per person on your list. Tell yourself, “I’m only going to spend $20 on each of my relatives,” – and stick to it! If you really feel like to have to get some someone a gift, consider making them something that’s more meaningful – like a card, a CD, or framing a photograph.
MAKE AN EXTRA MORTGAGE PAYMENT.
It’s important to invest in real estate. Right now, money is tight for everyone, but if you’ve been socking away some extra cash all year, a great way to use it is by making an extra payment on your mortgage. Not only is there a great tax benefit there, but the fact is that just one payment can make a considerable difference in the total you pay for your home; it can shave years off of that mortgage because you’re applying the money straight to your principle, not your interest payment.
REVIEW YOUR INSURANCE POLICIES.
It’s important to try and do this at least once a year. Now is a great time to do it to make sure you’re not overpaying in 2013. So often we get the insurances bills and we just pay them without really understanding our policy or investigating competitors. Instead, spend a few hours reaching out for new quotes. This applies to property insurance, car insurance, and health insurance.
MAKE A CHARITABLE DONATION.
If you are planning to donate to a charity this holiday season, you need to do it before December 31st in order to get a credit on your 2012 taxes. If you’re donating money, then remember to get a receipt or keep a written record of that donation. If you’re donating household goods, they’ll need to be in good condition or better to qualify. But remember that you or your account needs to itemize your taxes in order to get that credit. It’s also always a great idea to check out the charity you’re planning to donate to – to make sure it’s reputable, and that they qualify.
USE YOUR FLEXIBLE SPENDING ACCOUNT.
Millions of people in the US utilize flexible spending accounts, which allow you to put aside a set amount of pre-tax dollars from your paycheck for use on medical expenses throughout the year. But remember: if you don’t use it, you lose it. For many people, the deadline to spend that money is December 31st. So if you are due for a checkup or a dental cleaning, make an appointment now. Here are some other easy ways to spend that money: you can buy a new set of eyeglasses or prescription sunglasses; get a new set of contact lenses and stock up on lens solution; first aid supplies also qualify. And you can even be reimbursed for allergy and cold medications, pain relievers, and antibiotics… as long as you have a doctor’s prescription.
GET THE MUST-HAVE ITEMS IN YOUR PURSE.
Going into 2013, you want to be organized when it comes to tracking your finances. There are a few items you probably already have in your home that you can keep in your purse that will help you. First is a simple envelope. Many people overspend with “on the go” money. These are the little things – a coffee here, a lipstick there – that add up every day. If you’re swiping away on your ATM card for that type of stuff, then you have no idea where that money is going. When many people are asked how much they’ve spent that day, most will estimate 25% lower than what they actually spend. So set a budget for those “on the go” purchases and keep that money in cash in your wallet. When you run out of cash for the week, then you can’t buy anything else!
The next simple fix involves gift cards. People love giving gift cards around the holidays, and retailers love selling them. Do you know why? Because Americans are sitting on $30 BILLION dollars in unused gift cards! They’re either sitting in drawers collecting dust or they’re buried in purses with unknown leftover balances. Carry your gift cards with you at all times – even put them in your “on the go” envelope. The key is to carry a permanent marker with you. Every time you use a gift card, write the new balance right on the card. That way, you know exactly how much you have left to spend. Every little bit counts, and you don’t want to leave those cards with any unused dollars or cents on them.