Want to thrive in 2005? A few steps key to success


Published: Sunday, January 2, 2005 at 6:01 a.m.
Last Modified: Saturday, January 1, 2005 at 11:56 p.m.

Facts

AT A GLANCE

  • Analyze your last 2004 paycheck: Did you make as much money as you expected?
  • Did you work too much or not enough overtime?
  • Did you meet your pretax savings goals?
    You have until April 15 to make a 2004 IRA contribution, but you don't want to find yourself at the last minute without the $3,000 to fully fund the plan by Tax Day.
  • Update your resume: Add some of the accomplishments you touted in this year's performance review. Streamline job history explanations.
  • Then reflect on your career path and where it's taking you. If you don't like that direction, map out steps to change course.

  • HOUSTON - You survived Hanukkah or Christmas. You tackled the day-after sales in November and December.
    Building up cash over the next 12 months allows you to be debt-free next New Year's Eve.
    Analyze your last 2004 paycheck: Did you make as much money as you expected? No? Then, figure out what kept your income low and what you can do to get more money coming in. That may mean working more hours, making a case for a raise or finding a new job.
    Did you work too much or not enough overtime? Determine what you gave up or should give up to put in extra hours. Then ask yourself if you value the additional money more than what's being sacrificed.
    Did you meet your pretax savings goals? If the answer is yes, have you set the bar high enough? If you're not maxing out individual and company-sponsored retirement plans, you may not be putting enough away for later days.
    If you can pay your bills on time, lower your debt each month and save money for emergencies, educational goals and retirement, then you're getting by on your current pay level. So save all of your next raise instead of spending it.
    If you're not getting by, use a portion of the raise to step up retirement savings. Every little bit helps.
    Update your resume: Add some of the accomplishments you touted in this year's performance review. Streamline job history explanations. Delete irrelevant information.
    Then reflect on your career path and where it's taking you. If you don't like that direction, map out steps to change course.
    If getting a new job becomes your goal, send Happy New Year's cards to all your past and potential references this week with a brief handwritten note updating them on what you've been doing. Follow up by calling each person, sharing details about your recent successes and job search and asking the person to be a reference.
    Set up and fund retirement accounts: Own your business and only employ yourself? Then you may want to establish a solo 401(k) plan, which allows for bigger contributions than traditional small business retirement plans.
    You have until April 15 to make a 2004 IRA contribution, but you don't want to find yourself at the last minute without the $3,000 to fully fund the plan by Tax Day.
    Assess investing goals: In January, you will get your year-end portfolio statement. If you have real estate holdings, you should have already gotten your annual property tax bill. Now is the time, before you see the numbers or pay the taxes, to remind yourself about why you have these investments and if you are still comfortable with the risks associated with owning them.
    Those answers should guide you in your decisions about rebalancing the mix of mutual funds, stocks and bonds in your portfolio or selling real estate.
    Prep financial aid forms: If you have a child enrolling in college in the fall of 2005, you should know by now that Jan. 1 is the first day that universities start accepting the Free Application for Federal Student Aid. Known as FAFSA, this is the form you have to fill out for your child to be eligible for federal grants and loans.
    The closer you turn in that form to the start date, the better. Most financial aid is doled out on a first-come, first-served basis so you increase your chances of snagging a grant if you get the form in early.
    Before you can fill out your FAFSA, you have to prepare your federal income tax return because the aid form asks questions that can only be answered if you've done your tax calculations. But to turn in the FAFSA you don't have to file the return with the IRS. You also don't have to be completely accurate.
    If the best you can do right now is estimate, then use those best guesses to fill out the return and the FAFSA and update the aid form when you get the final numbers.
    It's best to submit the FAFSA online at www.fafsa.ed.gov rather than on paper because the computer program can help you avoid making mistakes.
    Donate money: Give generously before the end of the year to write off those donations on your 2004 tax return, especially if your household has taxable income of $75,000 or more and a lot of itemized deductions.

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