--- Organized Living DesignsGreat Tips to Improve your Life in 2006!

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10 resolutions to fix your financial life

Go ahead and trash the champagne bottles and funny hats after New Year's Day, just don't toss these 10 financialvows with them.

Go ahead and trash the champagne bottles and funny hats after New Year's Day, just don't toss these10 financial vows with them.By Allan Townsend

Making New Year's resolutions is easy. You've probably made hundreds. Now count how many you'veactually kept.

When it comes to your money there are 10 resolutions that you need to start now and can't afford togive up. The secret of success: Don't skip the first five. These goals build on each other.

Organizing your life

Resolution No.1: Set up a system. Any system, but get beyond the shopping bag of receipts andshoeboxes (see "Orqanize your financial life" for possible options). Dealing with that mountain ofpaperwork correctly is critical for tackling the other nine resolutions you'll read about.

Whether you buy an office-style file cabinet or dedicate a desk drawer, begin by creating thesecategories in advance so important information will already have a home as it comes in:

• Deductible expenses: Organize your credit-card charge slips and receipts for deductible cashexpenditures, paid medical bills, property tax bills, charitable contributions.Set up a separate file folder for any category where you expect deductible expenses. (What'sdeductible? Read "10 biq deductions too many people miss" or use MSN Money's tax deductionfinder tool.)

• Banking: This folder is for monthly statements, canceled checks and deposit receipts. At the startof the year begin a new check register (whether there's still room in the current one or not). Putlast year's register in your file. If you use financial software on your computer print out a year­to-date record. Or download the information from your online bank (see "Go paperless for saferbankinq" or Resolution No.2).

• Investments: Each of your brokerage or mutual fund accounts should have a separate file folder,so you can organize your trade confirmations and statements. You'll need to keep a long-termrecord of buys and sells, to help calculate taxes in the years ahead. (More about tracking thisinformation in a moment.)

• Tax-related items: This folder will hold important papers, such as W-2 forms and 1099 forms,which you receive from brokerage firms and mutual fund companies detailing your dividends aswell as gains and losses for the year. For more information on what you'll need for Uncle Samcome tax day, see MSN Money's Tax preparation tips decision center.

Doing a lot of this work on your computer using Microsoft Money (download a free trial of Monev 2006Deluxe here) or other personal finance software can save both time and paper. (Editor's note: Microsoftowns and publishes Microsoft Money and CNBC on MSN Money.) But even if you computerize financialrecords, you'll still need to save your information for at least three years.

One other crucial step in this process is to make copies of critical records (insurance policies, the housedeed, birth certificates) and create a list of important numbers. Gather up your credit cards and list thenumbers and expiration dates. Also list your health care, auto club and membership cards. Put it all in a

safe place just in case. This is also a good time to do a video inventory of your home furnishings forinsurance purposes. Take a videotape recorder through your house, commenting on the high cost items.Place the tape with your other important papers.

Resolution No.2: Bank online. Now's the perfect time to start banking online and this will really helpyou cut down on paper work. Just contact your current bank or for a list of the top online banks. It'seasy to sign up and start paying your bills online. You'll still need to keep a close eye on your account.Most security experts recommend checking it at least weekly.

Resolution No.3: Track everything financial online.Don't stop with downloading your bank account balances and credit card statements. It's also easy toaccess your brokerage and mutual fund accounts on the Internet. In fact, most 401(k) plans will alsoallow an online download of your investment records. Even better, you can simultaneously follow yourentire investment portfolio online. That's the real advantage of getting organized in the digital world.Check out the "Mv Monev" feature at here at MSN Money to see how it's done. (You'll need to set up anMSN Passport account to get started.)

Time for actionGetting organized is just the start. Now you've laid the groundwork for the next step, which begins withthe possibly painful process of a reality check.

Resolution No.4: Get out of debt. It could be a grim way to start the year, but there is no bettertime than now to make a complete list of everything you owe. Write down your credit card balances, theinterest rates being charged and the minimum monthly payments (you may find that you're payingmore than before; see "Whv your credit card rate iust went Up").

Figure out which cards (those with the highest rates) to payoff first. It may be best to dump the worstof the bunch and switch to a credit card that could help you save money.

Resist the temptation to payoff your credit cards with a home equity loan or line of credit. You'll only betrading the unsecured loan (used to charge lunch at McDonald's) to a secured loan with your house atrisk if you default. Also, if you don't curb your current spending habits you may end up dipping into yourhome's equity again and again, quietly whittling away your investment. This is one of "The 3 worstmoney moves you can make," according to MSN Money columnist Liz Pulliam Weston. You can findbetter options to repaying creditors in MSN Money's debt manaqement decision center.

Resolution No.5: Create a budget. Once you see what you owe you will have little chance to payoffanything if you don't create a budget. The first step will be to diagnose your financial health. Try usingMSN Money's Debt Evaluation Calculator. After getting a handle on where your money goes, see howyou can reach your new goal of eliminating debt by using the "60% Solution budqet strateqv." You canalso click here to learn other tips about setting goals, including "50 ways to trim your budqet."

(The goals are set, now what about sticking to it? That's the hard part, but you may find some helpreading "7 staqes of lasting financial chanqe.")

Resolution No.6: Review your 401(k) plan. Or sign up, if you haven't already done so. Manyemployers offer matching funds and you're missing out on free money if you don't take part. Quite a fewlarge-company plans match 50% of your contributions, up to 6% of your salary. Consider that level yourminimum and try to boost your contributions each year until you're contributing the maximum allowed.

This year you also have another choice in the new Roth 401(k), which lets you pay the taxes now beforeyou invest, allowing you to withdraw the gains tax-free when you retire. It's not for everyone, as youcan read in "A tax-free retirement iust qot closer," which includes a new tool to let you compare thedifferent 401(k)s.

You should also take some time now and review your retirement plan allocations for the past year. Thatwill give you guidance on whether to make any changes. Try online advice sites, such asFinancialEnqines.com, or use MSN Money's 40Hk) Ouick Check, which can help you decide where to putyour money in the coming year .

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Resolution No.7: Check your insurance coverage. Find out if you have too little or too much. Getstarted fast with Money's insurance planner, which will help you assess your needs in about 15 minutes.When it comes to your homeowners policy, you may have to beef up coverage if you've added a room toyour house or bought new living-room furniture. You may want to consider additional insurance (as arider on your policy) if you have expensive jewelry or an elaborate collection (porcelain dolls, paintings,comic books). Also if you want to save money up front you have the option of raising the deductible onyour policy to $500 or even $1,000 (this cost-cutting move works with car insurance, too).

When was the last time you thought about your car insurance? You pay according to the type of car youown and your driving record, however where you live also has a big impact on your premium (see thelatest research on the most expensive cities to drive in here). Cutting your bill may be just a few clicksaway. You can find online comparison sites easily enough with any search engine or you can get quotesfrom major lenders by going to MSN Money's Auto Insurance Center

Life insurance rates have been dropping, so there's a fair chance you can save money here, as well.Term life insurance is cheaper, but only offers payments after death. Whole life insurance costs more,but gives you more ways to use the money in the policy.

Resolution No.8: Check your estate plan. This could be as unsettling as investigating your debt, butit's still a must-do. While not everyone has or even needs a will, you should still have an estate plan todocument your wishes after your death. Strongly consider drawing up at least these three documents:1) a durable power of attorney for health care, 2) a durable power of attorney for finances and 3) aliving will.

Time to plan for the futureThese final resolutions can set you up for success in the coming years.

Resolution No.9: Make new goals. It's hard to plan for the future without being clear on what youwant to do. Sit down and list out your goals. This isn't the time to d ream. Don't hope for outcomes youcan not control. If your goal is to make more money, set a target, not just a wish. As you list your goalsinclude plans to achieve them. Now don't file this away. Stick it on the refrigerator or another highprofile spot so you can stay motivated and focused.

Resolution No. 10: Create a contact list. Everyone needs help, so write down all the people who canassist you to reach your goals: friends, supervisors and relatives. Then take steps to stay in contact withthem throughout the year for advice. Also take steps to grow your network. Don't be shy aboutintroducing yourself to strangers. The next person you meet may be the one who can make your plan areality.

And one last bit of advice: Simplify your life. Look around, do you really need all that stuff? Use the newyear to get rid of what you don't need (give it away and reap the tax benefits or sell it for some extracash). Clear the clutter, count your blessings and don't stress out over your resolutions -- just do them!

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