Your Money
Keep more in 2004
Here are 8 resolutions: pick one or two and stick with them to bolster your finances next year.
December 31, 2003: 11:44 AM EST
By Jeanne Sahadi, CNN/Money Senior Writer

NEW YORK (CNN/Money) - Oh let's face it. Making a list is easy. Crossing things off it is hard. So if you're tempted to make New Year's resolutions for 2004, do yourself a favor and keep the list short.

Sure, we could tell you to save more, spend less, invest smarter and keep the tax man at bay. But if you're not doing those things already and we suggest you do them all at once, it's like telling you to spit out the Ring Ding and go macrobiotic.

Not ... gonna ... happen ... friend.

Instead, eye this list of relatively painless resolutions. If one or two float your boat, pick 'em and follow through. Once you see how easy it is, you may take up others on the list.

1) Remember who's No. 1. You earn your paycheck, so you should get to keep some of it, right?

If you aren't already maxing out, boost your 401(k) contributions. If money is tight, up your contributions by just 1 percentage point a year. You'll hardly notice the difference in your take-home pay.

At the very least, make sure your contributions will earn your employer's match. For example, if your company only pays a match if you contribute 3 percent, then do it.

While you're at it, automate deposits, however small, to your savings account from your paycheck.

2) Don't chastise yourself for procrastinating. If you've put off smart financial moves, don't waste more time and energy feeling bad. Look for reprieves.

Take your IRA, for instance. You've got until April 15, 2004, to make your 2003 contribution. So if you meant to contribute, there's still time.

Funds you can trust
Money 101: Saving for retirement

Be sure to tell your IRA trustee that the contribution is for 2003, lest the trustee report it as a 2004 contribution.

3) Go ashless, save a bundle. If you quit smoking, you can save tens of thousands of dollars over your lifetime, to say nothing of improving your health, and feeling -- and smelling -- better.

A 40-year-old woman who normally smokes a pack a day can save nearly $1,300 in her first smoke-free year, according to, an online support group.

Your insurance will cost you less too. A 30-year-old man who takes out a $250,000, 20-year term life insurance policy issued by ING would pay $988 a year if he's a smoker, but only $317 if he kicks the habit.

4) Make like a bouncer and toss losers. The mutual fund scandal of 2003 taught investors one thing: Some fund companies have been eager to allow themselves and some big traders to profit at your expense.

But that's not necessarily a new lesson.

Consider your funds' expense ratios. Every year you fork over a percentage of your assets in a fund to cover management and other fees. You pay those expenses whether the fund does well or poorly.

With all the funds to choose from, the worst thing you can do to your nest egg is throw your money into overpriced, underperforming funds. So resolve to rid your portfolio of funds that take liberties with your wallet.

Mutual Funds
Fringe Benefits
Interest Rates

Money senior writer Jason Zweig argues that there's no good reason for a fund to charge annual expenses higher than about 0.75 percent for investment-grade bonds; 1 percent for large and mid-size stocks, or for high-yield (junk) bonds; 1.25 percent for small stocks and 1.5 percent for foreign stocks.

5) Stash some extra cash. Even if you haven't lost your job in recent years, news of the long-term unemployed in 2003 was a sobering reminder of how important it is to have an emergency fund.

Working up a cash horde of at least three months' of expenses can be tough initially. But try this: Put a third of your net pay into savings each month, suggests certified financial planner Pat Jennerjohn.

You may have to dip into that pot occasionally, but Jennerjohn says clients who have tried this tend to become attached to the higher balance in the savings account and are likely to spend less than if they'd just funneled all their pay directly into checking.

6) Boost your credit score. When home mortgage rates hit rock bottom in June, only about half of consumers had good enough credit scores to qualify for such low rates, according to Fair Isaac, creator of FICO, a widely used system to assess potential borrowers' risk.

Your credit score isn't the only factor that determines what rate you'll get, but it's key. So make sure yours is the best it can be before applying for a loan, by:

  • Periodically checking you credit reports and correcting mistakes
  • Paying bills on time.
  • Cutting credit card balances; it's good to keep your balances at or below 25 percent of your card limit

(To see how your score can affect your interest rate, click here.)

7) Make good use of shoe boxes. Doing your taxes and getting every deduction you deserve is hard when your records are a mess. You can do three simple things to prevent that headache this year, said enrolled agent David Mellem.

Write on every receipt "personal" or "business" and throw it into one of two shoe boxes labeled accordingly.

Each time you make a charitable contribution, including those by cash or by check, mark it on your calendar.

And if you use your car for business, note the number of miles you have on your odometer on Jan. 1 and keep track of the miles you drive for work.

8) Take your vacation. Seriously, how hard is that? Apparently, for some Americans, very hard.

A 2003 survey by Expedia found that respondents took 10 percent less vacation time than they did 12 months earlier. One in five said they felt guilty taking time off and 12 percent said they took no vacation at all.

If you have a history of forfeiting vacation time, why not commit to using all your earned time-off in 2004, by scheduling your weeks away from the office now?

If you need further encouragement, remember that your personal time is valuable, both in terms of health and money. The Expedia survey estimates that by not taking all their vacation time, Americans handed back more than $21 billion in unused vacation days to employers.  Top of page

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