January 22, 2009, 6:00 am

It Is Time To Clean Up After The Holiday Season

by: The Financial Blogger    Category: Personal Finance
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There is a reason why I didn’t write this post about cleaning your personal finance at the beginning of the year earlier: most people wouldn’t have read it anyway! I noticed that while most of us came back to work for a few weeks already, we only started working this week! I guess we can call it the post Christmas trauma? 😉

Prepare your tax paper

The tax season is coming and you should start receiving your end of year statements and other documents relating your investment transaction (I hope you took your capital losses this for 2008 in order to use them against your previous year capital gains!). Start getting your paper in order so when it comes time to fill your tax return, you won’t be running like a crazy dog after cars!

Establish your investment strategy

You have two things to look after in term of investment. Has your financial situation changed? Do you have the same goals? If yes, you don’t have to play around with your asset allocation. However, you must make sure that you are well diversified. If you were only in financials and oil (you must be crying by now), you should reconsider selling some of your investments and buy stocks in other industries.

The second point is to look at your investment options. In Canada, you can contribute to a RRSP account and receive a tax return (you have March 1st in order to have your rrsp contribution count for year 2008 and get your tax return this year). You also have the TFSA option. This account allows you to put 5K per person tax free in any kind of investment vehicles.


Reconsider your debt structure

You played Santa Claus and Rudolf just brought your Master Card and Visa statements? How about transferring your balance to a 0% APR for a few months in order to give you a break? I looked around and I found a great offer: 0% APR credit card. You will be able to transfer your credit card balance to 0% APR credit card with a 0% interest rate several months. This is obviously not a long term solution, but in the meantime, it could help you set up a budget and pay it off. Click here in order to apply for 0% APR credit card.

If you have too many debts to pay off, maybe you should consider consolidating your debts via a personal loan or a mortgage if you have equity in your house. Then again, you won’t solve the root of your problem (debts results from a cash flow problem and not from interest rate) but it will surely help you out getting out of debt.

Manage your cash flow

Still looking for a 2009 resolution? How about getting a budget done and sticking to it? You will be in a better position to see what goes well or wrong in your personal finance. Draw a budget at the same time so you can see the evolution of your net worth from year to year.

So get your broom and your calculator and start your personal finance cleaning 😉

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Comments

The 0% APR cards are available in the US only 🙁
Got any such good deals for Canadians?

Booo, tax season. Do you recommend a pro or will Ufile do? I think in one of your past posts you recommended a pro but you have to do a corporate tax return, which is a lot more knowledge. I’m getting a little to complicated with my finances and I’m afraid I might be missing breaks.

Don’t know if it’s you that said it, but I definitely know that if you are going to seek tax advice, seek it in the beginning of the year when you can make changes!

By the way, I tried to enter your June 16 chapter’s certificate draw but the blog entry never shows and still doesn’t today. I read it through my feed reader but could never open the web page. You should check it, maybe some clown put some nasty code into a comment.

Chris,

I’ll take a look for good APR in Canada

Goalhunter,
sorry for the contest, I’ll take a look but still count you in!

You should definitely get a tax expert if your personal finances are complicated. He obviously won’t be able to do much with year 2008 but will give your great tips for the upcoming year!

cheers,

FB.

haha My boyfriend is doing my tax paper (lucky me and lucky him!!!)

What should I do with my credit cards? You suggest to transfer my balance to 0% APR cards or re-finance with a loan. Some say that I should repay all?

Hey TFB, how often would you recommend reconsidering an asset allocation, yearly? More often?

Sophie,
I would give your documents to someone else. I would not trust your boyfriend 😉
If you can’t repay your card right away, transfer it through a low interest rate credit card (0% if you can ;-)) and setup a plan to pay it off faster.
if you realize that you won’t pay off your card within a year, you are better off with a personal loan!

IS, I review my clients asset allocation once a year. However, with the current market fluctuation, you are better off checking your asset allocation every quarter to make sure that you have still a great diversification!

I feel like opening an margin account to invest. I think it’s time to buy. What do you think TFB?

I don’t think my boyfriend would appreciate your comment 🙂

I’ll try to pay off my credit cards. And I would like to set up a budget. Can you suggest me some websites with templates? Advices on setting up your own budget?

Thanks again!!

by: The Financial Blogger | January 23rd, 2009 (6:06 pm)

OneDay,
I’d say it depends if you can accept the following scenario:
you borrow 25K and after a year, you will have that debt but your investment worth 15K

If you are comfortable with this though, then, you are good to go 😉

Hey Sophie,
here are some websites:
http://office.microsoft.com/en-us/templates/CT101172321033.aspx

http://finance.yahoo.com/how-to-guide/banking-budgeting/12832

you can also read:
http://www.thefinancialblogger.com/no-need-for-a-budget-%E2%80%93-use-the-cost-of-living-approach/

Thanks for the advice. I would start with a 10k margin account. I think I would go for ETFs (gold or oil, not decided yet). I’m not sure it’s the right place to ask: would you invest part of it in bonds? If yes, what would be the proportion?

by: The Financial Blogger | January 28th, 2009 (7:02 am)

Hey One Day,

If you borrow to invest, I don’t think you should take a part into bonds. At best, you will make 4-5% with this asset class and you will probably pay the same thing in interest charges.

If you want something closed to fixed income, I would suggest a dividend fund that will be less volatile than gold or oil 😉

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