Tuesday, March 18, 2008

New York Financial Diary: Lesson One

Lesson One: Getting Organized
By Alexandra Lebenthal

The financial world has dominated headlines recently as credit issues continue to plague the markets. In coming months this column will explore those issues and many others but begins with a basic overview of how to organize your finances.

How many of us never quite know where all our statements are and barely manage to get through tax time without pieces of paper trailing behind us? As the first quarter of 2008 nears to a close this is a good time to get organized for and set some habits that will last forever.

Get A Folder!
Buy a folder for all the statements where your finances are kept — banks, brokerage firms, 401k, IRAs, hedge funds, and insurance policies.

Each month make sure you replace the previous statements with the current month. (Keep year end statements until the following year. If you haven’t done this in the past you can usually get copies from the financial institution but it is always better to have it within easy reach.)

Review The Quarter!

March 31 ends the first quarter of a very volatile 2008 start. When you have received your March statements, which should arrive mid April, (and after you file your 2007 tax return) make an appointment to sit down with your financial advisors including private bankers, accountants, financial advisors or planners. Review your performance year to date vis a vis your overall goals.

It may make sense to dollar cost average if some investments have suffered but are still good long term targets or it may be time to sell some investments that haven’t performed and are no longer in sync with your financial goals.

Get Organized For Taxes 2008!
Have you done your taxes yet? Even if you have purchase an accordion file for all of your tax receipts for the 2008 filing period. It will make things a lot easier next year when you need to prepare. Also make sure to find out whether you should be making any changes in deductions or withholdings. (Bear in mind they are quite busy until April 15 and usually take a few days of needed rest right after that!)

Check Interest Rates!
Review all debt you have including home mortgages and credit cards. As interest rates have and most likely will continue to fluctuate over the coming year keeping a record of what you are paying in interest will give you the ability to make sure you aren’t paying too much.

Some interest you pay is tax deductible — i.e. your mortgage (up to $1 million), but other — like credit card interest is not. What’s more credit cards have some of the highest rates so if possible transfer credit card debt to lower rate loans or ones with a deduction like a home equity loan.

The Sooner You Start Learning The Better!

As someone who learned from an early age I am happy to share my knowledge and answer questions. The sooner you learn to keep track of your finances the more money you can save over time. I encourage you review your own situation directly with your advisors and also ask them for their own tips.

(Alexandra Lebenthal learned from her Father Jim Lebenthal and Grandmother before that about the basics of finances and investments. Today she is the CEO of Lebenthal & Co., LLC and its wealth management division Alexandra & James Co.)

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