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Shaping Up Your Finances

These days it’s sometimes impossible to know what to worry about the most—the threat of unemployment, the slow economy, war in the Middle East, or families and friends. The best defense to head off poor decision-making in this time of trauma: concentrate on what you can control, such as getting your personal finances in shape for the new year.

Every family has different needs, but some things hold true for everyone. For starters, write down your short- and long-term goals: saving for next year’s vacation, the kids’ college education, or a new house.

Examine your spending and saving habits; disciplined spending and a consistent savings plan are the keys to achieving your financial objectives, notes Money magazine.

Fill up the cookie jar with cash as well as eatable goodies, suggests one financial planner. Should an event disrupt the nation’s automated teller network or otherwise shut down your bank, you would have a cushion of cash to travel on with short notice.

Saving documents
Meanwhile, tidy up your financial records. Documents that support your tax returns, such as receipts for charitable contributions, need to be kept for at least three years, although the IRS has six years to raise questions. And there is no limit in cases of fraud.

Other papers need to be kept longer because it may be decades before they are needed. Among them are house deeds and mortgages, car or truck titles, and records of contributions made to nondeductible IRAs.

Do not toss pay stubs, says Crista Boyles, a vice president with Retirement Specialists in Houston. These can be invaluable if you’re forced to prove hire dates or salaries because a past employer’s records were wrong.

If you quit a job and left behind a small pension or worked for a company that went bankrupt, you may be entitled to a pension you’ve forgotten about. Check the Pension Benefit Guaranty Corp. Web site at To locate a federal or military pension, go to

Make time for a will
Write or update your will or trust agreement. Name an executor and make certain he or she knows where to find a signed, notarized original; it should not be in your safe-deposit box, which may be sealed at the time of your death.

Also in your will, name a guardian for your minor children, and write a letter explaining how you want the children to be reared. Write another letter stating who should get possessions with sentimental value, and keep it with your will.

Other paperwork: Set up a standby power of attorney, name a health-care proxy, and write a living will to be used in medical emergencies. Update the beneficiaries on your life insurance policies and 401(k) and IRA accounts, especially if you’ve recently divorced or remarried.

Save more money
Among other resolutions: Resolve to save more and spend money more wisely. Make a budget to find out where money goes and where you can save. Bank your raises or year-end bonuses rather than spending for a fancy dinner out or trip.

Consider other penny- (or dollar-) saving ideas, such as coupons or Senior Day discounts at the grocery. Do you really get your money’s worth from gym memberships or movie-rental clubs? Are all those premium cable channels really worth the cost?

Eventually, if you stop living paycheck to paycheck and amass some savings, the payback can be significant. Consider this: Once you’ve built up a nest egg, you can raise the deductibles on your homeowner’s insurance, and scale back car coverage. You can buy your cars with cash, rather than taking out bank loans or leasing them.

And perhaps best of all: You can pay off the credit-card balance each month so there won’t be finance charges.

There’s professional help available if you want to start building your wealth. Send a self-addressed, stamped No. 10 (large) envelope to the National Foundation for Credit Counseling, 801 Roeder Road, Suite 900, Silver Springs, MD 20910, call (800) 388-2227, or go on the Web at

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