Six Steps To Financial Freedom

The start of a new year is a good time to review your finances and eliminate time-consuming
paperwork. Here’s a checklist you can use to achieve financial and emotional stability:

• Prepare for emergencies. Set aside three to four months’ worth of your annual
  household income, and put the money into investments designed to keep the
  principal safe and flexible. Keep credit lines available.
• Pay down your mortgage. Assuming that there is no penalty for prepayment,
  steadily paying down the mortgage principal is an effective way of saving.
• Consolidate your accounts. Review all loans and determine if any can be
  refinanced at a lower interest rate. Calculate credit-card debt. If it is
  more than 15 percent of after-tax income, adopt a strategy for reducing the
  amount. One way is to use a home-equity loan.
• Draw up a will or trust. More than 70 percent of Kentuckians have neither,
  which means they have no control over how their estate will be divided when
  they die or who will rear their children. If you have a will or trust, review
  it every three years.
• Get started on tax returns. Track down receipts and documents that can help
  claim deductions. Review last year’s returns for items that might otherwise
  be overlooked. If this task is overwhelming, hire a competent tax professional.
• User advisors. During emergencies, people tend to get anxious and upset,
  which impedes rational decision-making. Having someone to rely on for advice
  will help you maintain perspective while examining your options, says Lee
  Rosenberg, author of Retirement: Ready or Not. Such advisors should include
  accountants, lawyers, financial planners, friends, family members, and ministers.

Take 10 minutes to simplify your life

Elaine St. James, author of Simplify Your Life, says that every household in
America could get rid of half its stuff. She suggests that a family take 10
minutes every weekend to go through tools, kitchen gadgets, and the garage and
get rid of 10 items. Then, place the giveaways in the car trunk and schedule
a time to take them to others who can use the items or take them to the local
thrift shop. Do not replace any of the items given away. Here are some other
tips:

• Sort out all of the paper or computer records you have accumulated over
  the last decade. Get rid of unneeded papers, while retaining tax returns,
  marriage and divorce papers, birth certificates, and military and medical
  records.
• Set goals. If you do not know where you are going, how are you going to
  get there? People do not plan to fail-they fail to plan.
• Create a true day of rest. Gather the family together for breakfast-with
  the TV shut off. Or go out for brunch, or have a picnic in the park.
• Create a family "Sabbath."