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Experts’ Tips for Making 2012 a Better Year

By Marcia Frellick
January 6, 2012

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What’s the best way to save money and pay off debt in 2012? We talked to seven personal finance experts who weighed in with their best money advice for the new year.

Bill Losey, retirement strategist, Wilton, N.Y.:

If you haven’t already, it’s time to automate your savings. If you’re not good at stashing money away, having a certain amount automatically taken from your checking account and placed in your savings account can help you regularly set money aside.

Losey recommends saving at least 1 percent of each pay period’s earnings. When you get a raise, add an extra percent to your savings, and spend the rest.

“This way you’ll continually increase your savings rate while enjoying a higher standard of living,” he says.

Candace Bahr, co-founder of the nonprofit Women’s Institute for Financial Education,

“Start the new year right by increasing your regular investment in your tax-deferred retirement plan at work, such as a 401(k) plan,” Bahr says.

You won’t have to pay taxes on your investment or earnings in a 401(k) until you withdraw them at retirement, so your savings have a chance to grow faster than an after-tax plan would. Plus, because the money you contribute comes out of your paycheck before you get your hands on it, you don’t have to make a conscious decision to add to the account each pay period — which comes in handy if you’re short on will power. If your employer matches your contributions, it’s even more important to steer your money in this direction.

The new maximum 401(k) contribution for 2012 is $17,000 for those under 50, and $22,500 for those over 50.

Carol Roth, business strategist and author of “The Entrepreneur Equation”:

Roth suggests going through your household each quarter, looking for electronics to recycle for cash. is one outlet that will offer you cash for items such as old cellphones, video gaming systems, e-readers, GPS devices, digital cameras and computers.

“Plus, you have the added benefits of the items being recycled and not sent to landfills and reclaiming some space in your home or office,” Roth says.

Andrew Schrage, editor of the personal finance blog Money Crashers:

Take a good, hard look at whether you really need that landline this year, Schrage says.

“I got rid of my home telephone service, which was costing me $30 per month, and never looked back,” Schrage says.

His family now functions just fine with cellphones.

There’s an added bonus to going landline-free: “I have also virtually eliminated annoying telemarketer phone calls from my daily life,” Schrage says.

Mike Sullivan, director of education for credit counseling agency Take Charge America in Phoenix:

“Review your insurance,” Sullivan says. “Almost everyone is paying too much for life, auto or homeowners. Many are paying too much for all of them.”

Review your debt, too. For example, Sullivan says, you may be paying 19 percent annual percentage rate (APR) on a credit card when you could get a 12 percent APR signature loan.

Finally, use cash. That way you’ll never have an overdraft charge or card fee, or pay interest on the expense. You’ll also know when you’ve used it up, Sullivan points out.

Lita Epstein, author of books including “Streetwise Retirement Planning” and “The Complete Idiot’s Guide to Improving your Credit Score”:

Every January, review your investments and be sure your allocation still meets your risk tolerance.

Epstein advises listing all your investments in a spreadsheet, whether they are holdings inside a 401(k), an education IRA or a non–tax advantaged investment account. Then you can assess your entire portfolio in one place.

Once you’ve built that portfolio, calculate what percentage of your holdings is in stocks, what percentage is in bonds and what percentage is in cash or cash equivalents. Do they still match your goals?

“For example, in a volatile stock market, you may find that you hold a larger percentage in growth stocks than you intend,” Epstein says.

Howard Dvorkin, founder of Consolidated Credit Counseling Services Inc. in Fort Lauderdale, Fla.:

It’s never too late to change your bad financial habits, even if you’ve racked up a nasty load of credit card debt.

“If you have made money mistakes (in 2011), pick yourself up, dust yourself off and start your plan now,” Dvorkin says.

Give yourself a crash course in personal finance 101. Check out FICO’s website to learn how to improve your credit score. Read over your credit card terms to make sure you know how much debt you need to pay off this year.

“You can’t become financially fit if you don’t know what areas of your finances need to be improved,” Dvorkin says.Th_expert-share-tips “You’ll suddenly feel more in control than you did before.”




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