Ten New Year’s
ONE OF THE surest ways to help make sure that
your new year is indeed happy is to get a grip on your
finances. That’s not nearly as hard as you might
think. My 10 steps to a financially fit 2008 aren’t
major time or money drains: A little goes a long way.
Here’s the list.
KEI TH LATHROP
1. Do the minimum. Ideally, pay off all your
credit-card bills in full each month. If that’s not
possible, always pay the minimum due on every
card. And pay on time. Fail to follow through and
your credit score will get hammered—to say nothing
of the $39 or so you can be hit with for each
2. Automate. Use your bank’s
online bill-payment service. Don’t
worry: It’s safer than sending payments through the mail. Once you
have it set up (it’s super easy) you
can pay bills in a snap and even
schedule automated payments to
avoid late fees. Online checking
can also be a terrific budgeting
assistant. It’s easy to keep track of
income/outgo and see where you
might be able to make some
3. Check your credit reports.
Everyone has a personal file at each of the three credit
bureaus—Equifax, Experian and TransUnion. What’s
in your files determines your credit score, and that in
turn determines the interest rate you will be offered
on credit cards, a mortgage, car loans, etc. Get an
annual free report from each bureau at
com) and check for mistakes or any suspicious
accounts that could be the sign of identity theft.
4. Save up. A checking account is not the right
place for your emergency cash savings. Checking
accounts typically pay less than 1 percent in interest.
Many saving accounts currently pay 4. 5 percent or
more. That’s a big difference.
5. Boost your deductibles. This may sound a bit
counterintuitive, but a higher deductible on your car
and home insurance can be doubly smart. First, a
higher deductible can lower your annual premium
by 20 percent or more. And the reality is that a higher
deductible means you won’t make the kinds of small
claims that tend to annoy an insurance company.
That makes it more likely that your insurer will offer
you a renewal policy when the time comes, and will
help prevent steep premium hikes.
Send your personal-
finance questions to:
Q&A with Suze Orman
The Costco Connection
P.O. Box 34088
Seattle, WA 98124-1088,
or fax to (425) 313-6718
or e-mail to
“Suze Orman Q&A”
in the subject line.
Suze will answer
in this bimonthly column.
She regrets that
cannot be answered
Suze Orman’s latest
book is Women &
Money: Owning the
Power to Control Your
Destiny. Suze’s TV
show airs Saturday
nights on CNBC. She
can be contacted at
6. Come to terms. If anyone is dependent on
your income, be it a child or an elderly parent, you
need life insurance. For the vast majority of cases,
term insurance is all you need (a special-needs
dependent or a family business are two exceptions),
and it is ridiculously affordable. You can shop online
at AccuQuote.com (
www.accuquote.com) and Select
7. Home in on extended replacement coverage.
Make sure your home insurance policy states that
your dwelling limit coverage is “extended” replacement coverage. This ensures a higher payment for a
covered loss than “standard” replacement coverage.
8. Take a tax break (part 1). If
“your employer offers a 401(k) or
If you qualify 403(b) retirement savings plan that
for a Roth IRA, includes a matching employer contribution, you must—and I mean
make it a must—contribute enough to qual- ify for the maximum employer
priority to contribution. Passing it up is akin to passing up a bonus.
9. Take a tax break (part
2). If you qualify for a Roth IRA, make it
of it!” a priority to take advantage of it! Follow a few simple rules and all of your withdrawals—both contribu-
tions and earnings—will be tax free when you retire.
(Your 401(k) withdrawals will be taxed at your ordinary income-tax rate.) Individuals with adjusted
gross income below $114,000 and married couples
who file a joint tax return below $166,000 can contribute. The maximum annual contribution is $4,000
if you are less than 50 years old or $5,000 if you are
older than 50.
10. Educate yourself on 529s. If you intend to
help pay for a child’s college education, a 529 college
savings plan is a great way to stash away money.
There is no income limit on who can contribute,
and any withdrawals used for college costs will not
be taxed by Uncle Sam. Learn more at
The Costco Connection
Costco offers special values on a variety of business and personal financial services from leading
providers that can help you meet Suze Orman’s
10 New Year’s resolutions. For complete details, go
to costco.com and click on “Services.”