9 Year-End Money Moves

This article is part of an M-Network group writing project, the 12 Days of Christmas – Personal Finance Style. As the project moves through its days, I will be adding each article at the bottom of this post. We’ll be posting from December 1st to December 12th.

The year is quickly coming to an end, and there are things that you could do to improve your finances. Here are 9 money moves that could help you for years to come.

chess move

Photo by Edwin Dalorzo via Flickr

1. Set Financial Goals For 2009 And Beyond

Having SMART financial goals is one of the most important things you can do to improve your finances. There are three basic steps you should follow when setting financial goals:

Write down your goals
Prioritize your goals
Make each goal a SMART goal

I have a good article that explains all of this in detail, please check out Money Lesson #2: Setting Financial Goals.

2. Sell Losing Investments

Each year, you are allowed to apply your investment losses against your gains, and deduct any excess loss up to $3,000 against your income (i.e., tax loss harvesting). I am sure you have some losing stocks this year, and you should take advantage of this tax provision. You could always make other investments to stay in the market, as long as you are careful about the wash sale rule.

Also, I think it’s a good idea to get rid of some mutual funds from your taxable accounts this year. I have a feeling that some funds will be distributing significant amount of capital gains due to the volatile market we have been experiencing. This could cause you to both losing money on your investment and having to pay capital gains tax. If you don’t know what I mean, check out Mutual Fund Double Whammy.

3. Extreme Expense Reduction

Question everything that you spend money on and ask yourself if you really need it. Better yet, imagine that you just lose your job and think about how you’ll survive. What would you cut? To help you think through the process, check out Lower Your Cost Of Living The Geeky Way, and for some money saving ideas check out How To Save Your Home From Foreclosure.

4. Donate To Charities

Charitable donations are tax deductible as long as you can produce proof when requested. Non-cash donations are also tax deductible, but it’s a little more involved; especially if you donated more than $500 worth. If you are short on cash, there are also other ways to give — check out 6 Ways To Give for ideas.

5. Pay Down Your Debt

If you have outstanding credit card balances, or a secured loan like home equity loan, you should consider paying them down. My 7 Steps Debt Reduction Illustrated article could help you effectively pay down your debt. If you can’t afford to pay them off, consider taking advantage of 0% APR balance transfer credit card offers to lower the overall interest rate. Just make sure you don’t pay too much balance transfer fee along the way, and try not to use your credit card until everything is paid off.

6. Fully Contribute To Your 401k and IRA

If you don’t carry any debt, this is a great time to save more money for your retirement. There are several benefits to contributing more to your 401k and IRA right now:

You’ll earn more company matching contribution.
The market is currently about 40% off its peak. This allows you to buy more shares of otherwise fundamentally sound companies.
You’ll be able to deduct your contributions and reduce your income tax.

7. Pay Down Your Tax-Deductible Bills

There are certain bills that if you pay before December 31st will allow you to increase your tax deductions. Two prime candidates are your property tax bill and mortgage payment. If you are a business owner, paying your bills now or spending money on your business will allow you to claim these expenses for tax purpose.

8. Review Your Insurances

If you haven’t review your insurances in a while, take a look. Do you still need everything that you have? Do you need more? At the minimum, you should review these (if applicable):

Home insurance
Car insurance
Health insurance
Life insurance
Disability insurance

You should also consider getting an umbrella policy if your net worth exceeds the liabilities coverage amount on your car and home insurances. I recommend using services like NetQuote or InsureMe to quickly find an agent or a broker in your area – sometimes switching to a different company can save you a significant amount of money.

9. Enjoy Life

Lastly, just remember that money is not the most important thing in life. Take care of your finances, but more importantly take care of your health and family — and simply enjoy life!

Have your own ideas for year-end money moves? Make sure you let everyone know in the comments!

And here are the rest of the 12 Days of Christmas – Personal Finance Style from the M-Network

Day 1 – The First Rule Of Personal Finance at Paid Twice
Day 2 – 2 Financial Goals – Less Debt, More Income at Cash Money Life
Day 3 – 3 New Year’s Worksheets at Mrs. Micah
Day 4 – 4 ways to be better prepared for Christmas next year at Gather Little By Little
Day 5 – 5 Golden Rules To Follow During The Holiday Season at My Two Dollars
Day 6 – 6 Ways To Give at Moolanomy
Day 7 – 7 Savings Strategies at Being Frugal
Day 8 – 8 Simple Snowflakes at Paid Twice
Day 9 – 9 Year-End Money Moves at Moolanomy
Day 10 – 10 Personal Finance Essentials at Cash Money Life
Day 11 – 11 Ways To Decorate at Plonkee
Day 12 – 12 Steps to a Prosperous New Year at Being Frugal

11 Comments

Donny Gamble
December 9, 2008, 10:46

These are some very positives moves that everyone should take heed of if they are planning to have a good year in 2009.
Aya @ Thrive
December 9, 2008, 12:10

I think the mastermind point behind it all, especially #1, 3 and 8 is to sit down, get organized and reorganize. I’m a big fan of writing things down and reconsidering my spending behavior; I think its even more effective when you write things somewhere you’ll see everyday. I recently bought a small white board and every time I want to buy something, I write down what it is and it’s price. After a few days of constantly seeing those numbers, I’d decide against things that start to lose appeal because of its price. Maybe not everything is as simple, but visualizing things and having information in one place really helps to analyze your finances.
PT
December 9, 2008, 12:36

Great tip about the property taxes. I think I will pay them in 2008 and deduct, since 2009 we’ll have a lower income and more deductions (new baby).
Steve
December 9, 2008, 15:28

Thanks for the great! information. I am planning to follow the 12 days of Christmas, which will, I hope, grow my money tree!!
Make Friends, Earn Money
December 9, 2008, 14:41

I think that some people think why should I set goals in my own personal finances, i do enough of that at work. However setting SMART objectives is very important for future financial planning and will enable individuals to build a financial safety net in the future from a good portfolio of savings, stocks and shares or property. You are exactly right to make objective setting an important part of personal financial planning
Pinyo
December 10, 2008, 0:06

@Donny – Thank you.
@Aya – Good point about organizing everything. Sometimes it’s hard to just sit down and focus with so many distractions. I also like your whiteboard technique…very cool.
@PT – If you have the cash, I think it’s worth it.
@Make Friends – I agree, and in general I find myself doing better if I set goals for myself. Like this blog, I haven’t set subscriber growth goal and it haven’t grown at all…
@Steve – Thank you. It’s a good series, please be sure to share it.
Paulette @ SpendTracker USA
December 10, 2008, 10:20

I think you’re right on the money with the credit card tip. I just transferred my final credit card balance from one of my cards to another of my cards that offered a 0% APR for a year deal. I didn’t open a new card because that could ding my credit. I just had a higher-limit credit card sitting with no balance and a great transfer offer, so I took it. Paying off that last bit of credit card debt is my foremost goal in 2009, and I’ll be minding my P’s and Q’s so the offer isn’t rescinded because of a late payment or anything. Most card companies will work with existing cardholders – particularly if they’ve been good customers or if they play one company against another. Never hurts to ask.
Alisa
December 16, 2008, 15:21

Hey.. question about number 2. What about investments in which you have had losses (and sometimes its not because of the operation of the business but other factors like the economy) but you want to buy the stock at the lower price. Can you sell to lock in losses but then buy back at the cheaper price to take advantage of future gains and a greater margin of safety? Is there a window of time that has to go buy before you can buy the stock again after you sell it? Any other thoughts on this? Be well?
Pinyo
December 17, 2008, 13:30

@Paulette – Thank you for sharing. That’s a very good example.
@Alisa – If you are planning to buy the exact same stock back, you have to wait at least 31 days before buying it back, otherwise, you’ll be subject to wash sale rule and cannot use the loss for deduction. If you are talking about EFTs and mutual funds, you could also be subject to the wash sale rule if the IRS consider them substantially identical security — but this is beyond my expertise and you should consult your investment and/or tax advisor on what is considered “substantially identical”.
On a different note, you could sell your losing stocks and buy and index funds and/or ETF to stay in the market.
Trevor Shipp "Financial Nut"
December 17, 2008, 19:42

Thanks for the 9 steps! Reviewing what you pay for your car insurances, health insurances, etc… is absolutely KEY! My wife and I are in the process of changing who we do car insurance through, and we will literally be saving over $60 per month by switching to Geiko (they gave us a “FREE RATE QUOTE” * you have to say it in an Australian accent for it to be fun!).
We’re hoping to save some real money this year just by reviewing our monthly expenses.
Thanks for the insight!
Milo
December 22, 2008, 16:07

money definitely IS the most important thing in life