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Five Financials Moves You Might Consider in 2012
Posted By Jim On 12/21/2011 @ 7:15 am In Personal Finance | 7 Comments
With 2011 coming to a close, you’re probably not thinking about your finances. Good. This time of your should be about reflecting on the good times of 2011, looking forward to a better 2012, and spending time with family and friends. Tweaking your portfolio and trying to squeeze a little more out of your cash back credit card is probably not something that will yield all that much, compared to how much more you’d get from quality time with the ones you care about.
That said, I wanted to throw out a few ideas of things you might want to tackle come 2012. These aren’t big New Year’s Resolution type of ideas but they are important and they may nestled themselves deep in the back of your mind sometime this year. I’m just here to pull them out and remind you that it might be a good idea to give them a try next year.
Between the announced fee hikes (and subsequent cancellation of those fee hikes) and the “Move Your Money” campaign earlier this year, you were probably tempted to change banks this year. I know I was. In fact, the fee announcement by Bank of America  prompted me to move a lot of my transactions to Ally Bank, which is the first step in moving banks. My direct deposits, my payments to credit cards, and most of my bills have been shifted over to Ally Bank. Their online savings account gives me 0.89% APY and the checking account gives me 0.80% APY, Bank of America offered zero. 0.80% APY isn’t enough to entice me to change but the writing was on the wall when BoA announced the fee.
There’s something a little scary about online bill payment – you press a few buttons and some printer somewhere spits out a check that pays your bill. You don’t write a check, you don’t sign anything, and you don’t put anything in the mailbox. It just happens. At first it’s a little unnerving, I agree, and you might even send yourself a check just to see how it looks. Eventually, you trust the system and your life is made that much easier. We use bill pay now for everything, even payments to our friends for things like sports leagues. It’s just easier.
If nothing else, you can avoid mailing paper bills. Stamp prices go up next year  to 45 cents and mail isn’t 100%. The last thing you want to deal with is a payment arriving late or not at all.
Every so often I take a quick peek at Wells Fargo’s mortgage rates  to see where things stand. They’ve been pretty stinking low for a while now and if you have a home loan interest rate 1% higher than the listed rates, you’ll want to consider a refinance. A few quick things to consider are any fees you might pay for refinancing (hence the 1% hurdle, that’s the “rule of thumb” people use), the loan term (if you have 20 years left, avoid refinancing into a 30 year fixed loan), and whether your existing lender will consider a modification.
With an uncertain future and a weak economy, it’s hard to write a convincing argument to save more for something twenty, thirty, or even forty years in the future. The reality is that if you can put just a few more dollars towards your retirement, you’ll reap significant benefits down the road. The stock market may look like a life raft in a hurricane right now but over many many years it’s unbeatable as a way of accumulating wealth. Retirement is something that’s decades away and as such you have enough time to weather the ups and downs.
Roth IRA – If you haven’t contributed to your 2011 Roth IRA, you have until tax day of 2012 to make a contribution. It’s one of the quirks in the system that lets you save for retirement after the year has passed. You don’t get a deduction for it, which is one of the reasons why they don’t really care, but you do get tax benefits in the future (contributions are not deductible but gains are not taxed).
I know budgeting is boring. The reality is that your money isn’t any different than anything else and keeping a budget is critical to reaching your financial goals. Without metrics, you can’t improve. If you are just recording the rough dollar amounts of your spending, that’s good. That will give you enough data to analyze your spending and see if there are opportunities for you to find some easy savings that you didn’t know about. Are you paying $15 a month for Netflix but not watching anything? Has the same DVD been sitting on your coffee table? With a budget and a quick look, you can trim that and use that $15 for something else. It’s not always about constraining yourself, it’s about understanding where the money goes.
Did you have something else tucked away back there that one of these ideas jostled out?
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 fee announcement by Bank of America: http://www.bargaineering.com/articles/bank-america-cancels-debit-fee-leaving.html
 Stamp prices go up next year: http://www.bargaineering.com/articles/stamp-price-increase-jan-22-2012.html
 Wells Fargo’s mortgage rates: https://www.wellsfargo.com/mortgage/rates
Thank you for reading!