Take Note of Your 401(k)
There's no better time than the beginning of the year to check in on your 401(k) contributions. Before investing elsewhere, it's a good idea to make sure you're on track to max out your 401(k) for the year because it provides a tax-free way to grow your money. The most you can contribute to a traditional 401(k) in 2010 is $16,500 (people over 50 are allowed an additional $5,500 catch-up contribution). Matching amounts from employers aren't included in that figure, but the total amount contributed can't exceed $49,000 (see more details here
). You might also consider using a Roth 401(k) or converting a traditional IRA to a Roth IRA for tax purposes. My colleague Christine Benz discusses the benefits of Roth IRAs in this article
.Read the Fine Print
now require credit card companies to give consumers 45 days notice before hiking fees or interest rates and changing credit limits, but that doesn't mean they'll broadcast changes in big, bold lettering and coherent language. Oftentimes the important stuff is buried in barely legible legal jargon, and the document itself might even look like junk mail. But it's worth checking out, especially because many credit card companies are itching for ways to make back money after rising delinquencies. Buried deep in the fine print of a piece of mail I recently received from my credit card company was a notification that it will start charging a fee to send out monthly paper statements. Luckily I already receive my bills online, but I would have been pretty annoyed if an extra charge unexpectedly started showing up on my statements.Get Organized
Keeping meticulous records is a wise move, but over time, years of paper statements can pile up and become overwhelming (especially if your storage space is limited). The first step to cleaning up a mountain of paperwork is to invest in a shredder. It will be one of the smartest purchases you'll ever make, protecting you against identity theft and making you more comfortable parting with sensitive documents. Here are some things to keep in mind when sorting through financial paperwork:
� Hang on to tax returns for at least three years (seven years in some cases--see the IRS guidelines here
� Keep tax returns for the years in which you make IRA contributions indefinitely to prove that you have already paid taxes on the investments.
� Save brokerage statements for mutual funds and stocks until you sell the securities.
� Quarterly statements for your 401(k) can be shredded once you receive your year-end statement, but keep the updated annual statement.
� Deposit slips and ATM receipts can generally be shredded once you verify that the amounts show up correctly on your statement.
� Go through your canceled checks once a year, saving those relating to major purchases, tax-deductible items, or business expenses for the current tax year.
� You can get rid of credit card receipts once you verify that the amount matches your statement. Keep the statements for seven years if there's anything tax-related on them.
� Throw out marketing materials that come with bank and credit card statements as soon as they arrive unless they apply to you.
� Keep your pay stubs until you verify that the information on your W-2 form is correct.
� Save purchase and home improvement records for your house or condominium indefinitely. Once you sell, hang on to your records for at least six years.
For more tips on how to organize your financial life, check out Christine Benz's "30 Days to Financial Fitness" series
or her latest book
Some people like getting their bills in the mail and physically writing out checks because it helps them keep tabs on how much they're spending. While that's not a bad method, signing up for online bill payment can be more efficient because it minimizes paper buildup and saves you money on stamps. Another easy way to go paperless is to request electronic documents from your mutual fund or brokerage companies. Reading the latest prospectus or annual report online lets you easily find information about your funds instead of thumbing through a massive paper document that you'll eventually throw out or recycle.Check Your Credit Report
This one has been on my to-do list for a while now, and it's something that isn't even that hard to do. Even if you already own a home and have never missed a credit card payment, it's a good idea to check your credit report to make sure there are no discrepancies or signs of identity theft. You're eligible for one free credit report annually from each of the three reporting agencies--Equifax, Experian, and TransUnion. Simply visit www.annualcreditreport.com
, which allows you to view your report after you verify your identity. If you prefer, you can print out a form on the site and mail it in, or you can call 877-322-8228. See more information on the Federal Trade Commission's website