A column on personal finance prepared by the Virginia Society of Certified Public Accountants


(November 21, 2003) – Year-end is a great time t o assess your financial condition and begin a training regimen. Here are some exercises from the Virginia Society of CPAs that will help you stay in optimum financial shape.

1. Warm up with a meeting.

Year-end is an ideal time to meet and develop a financial plan with your CPA advisor. Outline some short- and long-term goals together and then monitor your progress throughout the year.

2. Slim down spending.

Maintaining a budget and careful tracking of your spending are the only effective ways to keep tabs on your cash flow. Once you see where your money is going, you can make more informed choices on how best to spend less and save more.

3. Stretch to contribute more to retirement savings plans.

A comfortable retirement requires active planning and regular, deliberate saving. Whether you have a 401(k) plan at work or an Individual Retirement Account (IRA), be sure that you’re making the most of this tax-advantaged way to save for retirement. For 2003, the maximum contribution is $12,000 for a 401(k) and $3,000 for an IRA. If you’re age 50 or older at the end of the year, the maximum extra contribution is $2,000 for a 401(k) plan and $500 for an IRA.

4. Reduce credit card debt.

Carrying credit card debt and paying interest on that debt means you are voluntarily paying more for your purchases. If you can’t afford to pay your balances in full, consider whether it makes sense to restructure your debt. You can do this by using the equity in your house or by shifting debt to a lower interest-rate credit card.

5. Run for coverage.

All employees should carefully choose among the insurance coverage choices available to them. If you are solely responsible for your medical costs, be sure you have sufficient funds to cover a deductible in the event of a medical emergency.

Working couples with insurance coverage from two employers have another set of choices to consider. Depending on the benefits and premium costs for each plan, the best option may be for one spouse’s plan to cover both of you, for each to have separate coverage, or to maintain duplicate coverage for both. Carefully examine each scenario to determine what is best for your family. Keep in mind that even with double coverage, you cannot collect more than 100 percent on the same claim.

6. Get a personal trainer.

Everyone should have a handle on their financial condition. If you have relied on your spouse to handle all the financial matters, it’s important for you to learn at least the basics. Make time for your spouse to train you or get up to speed with a financial professional, such as a CPA.

7. Inventory everything you own.

Be sure to take photos, digital or traditional, or video everything you own. Store the photos or videotapes in a secure place away from your home. This pictorial record may prove to be crucial in the event of a fire or theft.

8. Get moving on managing your credit history.

Everyone needs a credit history. For example, each spouse should have one credit card solely in his or her own name to be sure that each establishes a separate credit history. If you don’t have a credit history under your own name, it will be difficult to get a credit card, mortgage, or a loan. Also, get copies of your credit reports on a regular basis to prevent incorrect information from creating problems in the future.

9. Power up your legal documents.

Arranging for a durable power of attorney is a simple and inexpensive way to arrange to have someone make financial and legal decisions on your behalf should you be unable to do so. A durable power of attorney remains in effect if you ever become mentally incompetent and will allow someone you trust to conduct important business on your behalf, such as banking transactions, investing money, preparing and signing tax returns, and buying and selling a home if you are incapable. You can make the provisions as broad or as specific as you like, although CPAs recommend that provisions be as broad as possible to address your future needs.

10. Organize your financial records.

Keeping financial and family records in an organized manner can save you time, money, and trouble in the event of an emergency. Store permanent records such as birth certificates, property deeds, insurance policies, wills, powers of attorney, and other important documents in a safe, fireproof location, preferably a safe deposit box. Copies of these documents and other records should be kept in a clearly marked filing system in your home. Be sure that your spouse, family and executor are aware of where these documents and records are stored.

The Virginia Society of CPAs is the leading professional association dedicated to enhancing the success of all CPAs and their profession by communicating information and vision, promoting professionalism, and advocating members’ interests. Founded in 1909, the Society has nearly 8,000 members who work in public accounting, industry, government and education. This Money Management column and other financial news articles can be found in the Press Room on the VSCPA Web site at

Lifetime Financial Planning, LLC

Dean Knepper, CPA, CERTIFIED FINANCIAL PLANNER™ professional

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