If It's on Your A, It Isn't an Asset

Everyone starts of their January 1 with vague financial goals. My financial goal this year is to open and fully fund an IRA. Without the automatic 401k payroll deduction I was used to, I did absolutely nothing for my retirement in 2007. I've already crafted a plan to fund it - now it's up to me to execute it.

In the grand sceme of things, I'm pretty fortunate that the only financial worry I have is how I'm ever going to get the motivation to call Fidelity to start up an IRA. This has to do with proper planning and nothing else. When it comes to financial planning, there are a lot of people in this country who are flat out fucked. I love watching financial TV shows (Suze Orman, Maxed Out, Michelle Singletary especially) and observe how "financial gurus" evangelize those who are struggling under financial woes.

Incidentally most of the people who go on those shows have household incomes in excess of six figures. It's easy to point at them and say "yeah, fuck you. If I made as much money as you my life would be so much easier.". Unfortunately that isn't how it works. How do rich people fall into the same financial traps as those not as well off? Poor planning for starters.

As single women it's especially important that we take control over our financial destinies. If we get sick or lose our jobs we don't have a spouse to cushion the fall. From growing up in a household where my father's income was 100% commission to having a fluctuating income of my own, I've learned a lot about how to avoid the pitfalls that plague so many. If financial planning isn't your thing, in '08 you should have a few specific goals:

1. Set up an emergency fund of at least $500 with the goal being six months salary. If saving six months salary seems unrealistic at this point, start at $500 and slowly build up. At a minimum, $500 will cover most emergency car repairs.

2. Make your lists and check them twice. Supermarkets and retail stores count on impulse spending, which benefits them a lot more than you. Drawing up a list of needed items before you leave the house will help you control expenses.

3. Determine if it's a need or a want, then have a plan to pay for it. If you want a new car, high def TV, or half the Nordstrom shoe department and have the cash on hand to pay for it, go for it. If you don't, think long and hard about ways to acquire it without putting it on the charge card. Are you getting a bonus soon? Can you eBay your unwanted stuff to fund your purchase? While we all work hard and deserve nice stuff, you're doing yourself an incredible disservice by charging up expensive items you may not be able to afford at the moment.

4. Credit is evil, but a necessary evil. Yes, having a credit card is a wonderful way to build your credit history, but only if your balance is less than half your credit limit (it's called a debt to credit ratio). If your cards are maxed out and you can't figure out why, think about the stuff that you routinely charge up. The most likely culprit: restaurant tabs and clothing purchases that you could've paid cash for. Set up an online ID for your credit card so you can track your purchases. Also, most credit cards give you the ability to pay your balances throughout the month. If you get paid bi-weekly, make it a habit to throw something towards your balance every pay day.

5. Set up a retirment account: I can't really comment on this one until I practice what I preach. However, I'm all ears if you happen to be an expert on this topic.