By Grant Webster
The winding down of sun and fun marks a good time to check on your financial health. Here are five important tactics for the rest of summer.
CREATE YOUR PERSONAL BALANCE SHEET
This is easier than you think. On the left side of a piece of paper write “assets” and on the right side write “debt.” On the bottom, write “what’s left.”
Under assets, list the value of your possessions, such as your 401(k) retirement plan or individual retirement account, your checking account, and the worth of your home. Under debts, list what you owe (loans, credit card balances and so forth).
Add up the assets and the debts separately. If your assets are bigger than your debts, put the difference under “what’s left.” Your goal over time is grow the assets column and decrease your debts.
If you have nothing right now in the “what’s left” column, don’t panic. Acknowledging room for improvement is the first step toward your financial success.
UNDERSTAND YOUR 401(K)
With pensions now as rare as a smog-free day in Los Angeles, your 401(k) likely will be your largest asset for the golden years.
Three primary components make up your retirement plan: your contribution rate, your allocation and your specific investments. You also want to determine whether your company offers a Roth 401(k) option, which can provide you with tax-free income in retirement.
The best way to understand your 401(k)? Call your plan provider. Most employees usually underutilize this (typically) free service, yet plan companies almost always maintain advisors on staff to assist you, the plan participant, with options.
REFINANCE YOUR HIGH-INTEREST DEBT
Interest rates are hovering close to historic lows. If you pay a high interest rate on your mortgage, car loan or even student debt, you can explore refinancing.