You can use the last days of 2012 to save a lot of money and reduce your stress in 2013 – assuming, of course, there is one.
Depending on what you believe, the days leading up to Dec. 21, 2012 may involve one of the following:
A) Breaking out your bucket list and doing as much as possible before we all die.
B) Buying lots of alcohol and waiting in a fog for the end.
C) Celebrating this holiday like any other.
If you’re A or B, you probably saw the film “2012,” based on the idea that the end of the 5,125-year-long Mayan calendar means the world will end with a bang on December 21, 2012.
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If you’re in category C and believe calendars predict holidays instead of apocalypses, maybe you chuckled when you saw this comic being circulated lately on Facebook.
I’m about to lay out some tips for year-end organization – the type of simple tasks that will help you greet the New Year with confidence that you’ve got all your financial ducks in a row. Ordinarily, I’d suggest starting right away. But this year, perhaps it’s better to start on December 22. Because while odds are the world won’t be ending next week, if it does, you certainly don’t want to be wasting time with this stuff. Better safe than sorry, right?
If you want to party instead – just in case – this checklist will be waiting for you on Dec. 22. At least, if we’re all still here.
1. Review your credit history (under an hour)
Get a free copy of your credit history at AnnualCreditReport.com – to see what the three major reporting agencies have in your file. Your credit history doesn’t include your credit score, but this is the information used to create your score, so you need to check it for accuracy. Take 10 minutes to download it, then a half hour looking it over.
To know what to look for, see 18 Tips to Give Your Credit Score a Boost. To learn more about credit scores, including a trick to get yours free, check out Credit Scores: 9 Things That Don’t Matter, 5 That Do.
2. Check out your tax situation (1-2 hours)
Some tax advantages have to be seized within the calendar year – waiting until tax season is too late. And with the “fiscal cliff” looming, you definitely want to know what’s going on with your taxes.
Look now into possible credits and deductions, especially if you’re close to another tax bracket. Start by pulling out last year’s return, examining last year’s deductions, and seeing if there are actions you can take now.
Can you add more to your retirement plan or health savings account at work, or take a deductible loss on an investment? For more ideas see 4 Reasons to Start Thinking Taxes Now, and for specifics, this year-end tax planning guide.
3. Clear clutter (1 hour to a few weeks)
There’s no better time than the holidays to turn your clutter into cash, or at least a tax deduction. The best way to approach your closets, attic, basement, or storage rooms is slowly – otherwise it’s too overwhelming. (Bonus: The end of the world might finish your cleanup for you!)
Pick one room, closet, or drawer per day, and spend a few minutes getting rid of stuff you haven’t touched in a year or more. Consider selling it online. If you’d rather help someone less fortunate, donate it. Either way, you’ll end up with more money, more deductions, less mess – and if you’re lucky, maybe even a regift.
If you’re paying for storage, check out 10 Ways to Save on Self-Storage.
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4. Plan for disaster (1-2 hours)
Even if the world isn’t destroyed, the destruction of your world is still a possibility – look no farther than the coasts of New York and New Jersey to see the importance of being prepared. If you’ve got your clutter under control, now’s a good time to take a home inventory.
There are several simple things you can do to disaster-proof your home and finances, like scanning important papers and storing copies in the cloud. You should also verify you have adequate insurance coverage for your belongings and yourself. Check out Important Insurance Lessons from Superstorm Sandy.
And even if you’re covered, make sure you’re not overpaying. Get a quote or two on our insurance page.
5. Review/rebalance investments (under an hour)
Investments like your retirement plan shouldn’t require a lot of maintenance, but they do require some. Take a look at how your investments are performing and decide whether it’s time to buy, sell, or leave them alone. Check out How Much Should I Contribute to My 401(k)? and the SEC’s Beginners’ Guide to Asset Allocation.
6. Support a charity (under an hour)
It’s the season for giving, not just because of good cheer, but also because of tax-deductible donations. It only takes a few minutes to check out charities. See 4 Tips to Find the Right Charity.
7. Max out retirement contributions (under an hour)
According to the IRS, the annual cap for IRAs (including Roths) is $5,000 for those under 50 on Dec. 31 and $6,000 for those older. (Plan ahead: Those caps go up $500 next year.) You have until April to do this, but not as long for your 401(k). You only have until Dec. 31 to contribute the max: $17,000 if you’re under 50, and $22,500 if you’re over. Finding out how much you’ve contributed this year should only take a minute or two. Use the rest of the time to contact your HR department and set up fatter contributions through year-end.
8. Spend your FSA (under an hour)
If you’ve set aside money in a flexible spending account, it’s gone shortly after year’s end: Use it or lose it. (You can read about the grace period and eligible purchases here.) Remember that as of last year, most non-prescription drugs no longer qualify. And next year, FSAs will be capped at $2,500. You can learn more in this Ask Stacy post.
9. Prepay bills (under an hour)
You might boost some tax credits and deductions for this tax year by prepaying things like your mortgage or next semester’s college tuition. If these bills are due soon anyway, get a deduction by paying in advance. What’s deductible? Look at last year’s tax return.
10. Find a financial adviser (1-3 hours)
There’s someone out there who can help you with most of the things on this list, and a lot more – a financial adviser. But it’s easy to pick one who doesn’t put your interests first, so check out our story How to Find an Awful Financial Adviser to avoid them.
The National Association of Personal Financial Advisors lets you look up professionals by zip code. Even if you choose one that charges by the hour, you can probably get a free first appointment.
11. Tinker with your budget (1-2 hours)
Have you spent more than you planned? Time to take a look and make adjustments, especially if your income or expenses have changed. If your budget’s busted, or you don’t have one, check out Budgeting Your Way to Happiness.
12. Change important passwords (under an hour)
A lot of sensitive personal information is one smart guess away from being stolen. Boost your security by updating your most important passwords at least once a year. A good password has a mix of numbers, letters, and special characters – but as this XKCD comic strip shows, length is more important than complexity.
13. Digitize documents (one hour to a month)
Even if the world doesn’t end, your filing cabinets full of paper should. Invest in a $50 document scanner and start transferring the contents of your filing cabinets to the cloud. Make sure to keep backups – we suggest some options and offer more advice in 5 Tips for Paperless Finances. Trying to figure out what to keep? Check out Clean Up Your Finances in 7 Easy Steps.
14. Make a will (under an hour)
Maybe not Dec. 21, 2012, but everybody’s got to go sometime. Plan for it so your loved ones suffer less. As Stacy explains in How Do I Get a Will on the Cheap?, lawyers can cost hundreds but do-it-yourself software is less than $50 and you can do it in less than an hour. If you have the time and money, have your computer-generated will checked by a lawyer later.
How to find the time to do this stuff?
The key is slow, easy, and gradual. Earmark just 15 minutes to an hour per day and go down the list. Start on Dec. 22, and even if you skip Christmas you can log nine hours by New Year’s. Keep in mind much of this stuff doesn’t require excessive concentration, either – you can do a lot of it while you’re watching TV.
And if you don’t get it all done? Well, there’s always next year. Maybe.
The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.