As many of you know, I have been writing and teaching about retirement planning for years. It's familiar territory for me. But it was a very different animal when I recently wrestled with my personal decision about whether now was the time for me to retire from the University.

I'm going to spoil the suspense and tell you the ending up front: I am retiring from University of Illinois Extension as of June 30. I hope to continue to do personal finance education, and even to be an occasional guest blogger here on Plan Well – Retire Well. But my duties as Consumer Economics educator will be over at the end of this week.

For this last post, I decided to talk with you about the kinds of information that helped me make this decision. There is much that is uncertain: how investments will perform in the future, how long my husband will continue to work, how much income I will be able to generate from my work as an independent financial educator, and what the future inflation rate will be, to name a few. But there was a lot of other information that was available to me. I tried to make good use of all of it when making this life-changing decision.

I didn't accumulate this knowledge and information overnight. So even if you think retirement is a few years away, start thinking about the information you will need to make an informed decision.

Here are some of the specific things I have done to fully understand my financial situation and how different decisions would change it:

• I track my monthly and annual expenses. I started doing this long before the online programs and mobile apps were available so I download all my transactions from my bank and credit card accounts using a software program. I run reports to see how much I spend in various categories, how much we're really saving, and to see how those numbers vary from one year to the next.
• I listed the major upcoming expenses I have planned, such as a new car or repairs to the house, and estimated those costs. I have planned where that money will come from.
• I estimated what my expenses will be after retirement.
• I evaluated when to begin claiming Social Security benefits, which will be reduced due to the fact that I will also receive a pension for government work where I did not pay into Social Security. Because I am subject to that reduction, I used the special WEP calculator on the Social security website instead of the usual benefit calculator to estimate my benefits.
• I do a net worth statement at least once a year so I know the value of my assets and liabilities.
• I compared my expected income and expenses, and projected when and how much I will need to withdraw from on savings to fill the gaps
• I studied the research on sustainable withdrawal rates and have an idea of how much I can withdraw from my savings and investments each year and have some assurance that my money will last as long as I will.
• I know the rules for my pension. I read and re-read all the information available about it. I attended educational sessions about my benefits. I also had an individual counseling session with a representative of the retirement system to be sure I understood what would happen under various scenarios.

The decision about when to retire is a very individual one. And it isn't all about the finances. I also weighed the burden of a long commute, my desire to do some things that I can no longer do in my current position, and some quirks about my pension plan that meant I should either leave now or be certain I would work another two or three years.

There are many uncertainties, and I have re-evaluated this decision more than once. But at least I know I made an informed decision. Now it's time to move on.

I have thoroughly enjoyed writing for the Plan Well – Retire Well blog. I hope you have enjoyed my posts, and maybe picked up some useful tips along the way. And I hope to be back, at least from time to time, to share the new things I'll be learning.

Thanks for listening.

It happens every January. Gyms are filled to bursting with people determined to get in shape. Ads for diet plans fill seem to appear during every commercial break. And you're probably vowing to get rid of all that paper that's stacked up around the house. What's OK to throw away? And what's not?

Here are some general guidelines that may help.

Toss

• Pay stubs from 2010 or before. Your W-2 will give you all the tax data you need from those pay stubs. If there's additional information doesn't show up on the W-2, such as the amount of vacation or sick leave that you've earned or used, keep your most recent pay stub and perhaps the final one from each of the last couple of years.
• Utility bills. Did the company receive and credit your last payment? Once you get the next statement and know that they processed your payment, you can toss the older statements. But you might want to keep gas and electric bills for a year or so if you're tracking your energy usage or planning to sell your home; prospective buyers may ask what it costs to heat and cool. If you can access the information online, you can still safely toss any paper statements.
  • Exception: If you deduct part of your utilities as home office expenses, you'll need to keep those utility bills according to the guidelines for tax records, below.

Keep for a while

Warranties and purchase records. To get a product repaired that failed during the warranty period, you'll usually need both the warranty information and proof of when you purchased it. An easy way to keep that information together is to staple your receipt inside the use and care booklet, which usually also contains the warranty information. But ask yourself whether you would even bother with the warranty claim. I remember my husband watching me carefully file away the receipt for a $15 item and asking, "If it quits, will you really bother with the warranty?"

Keep for a long time

The Internal Revenue Service can audit anyone for up to three years. That goes up to six years if they charge that you substantially under-reported your income. And there's no time limit if you filed a fraudulent return or if you never filed the return. So keep all your tax records – both the tax return and all the documentation – for at least three years, and preferably six. You don't file until the next year, so it may seem like seven years. Your 2011 return will be filed in 2012 and you want to keep it until 2018.

And how about records of investment purchases and sales, or records of home purchases and improvements? For investments, you'll need records of the original cost plus any reinvested dividends or capital gains. Keep those until you've sold the last share of that particular investment, and then keep the records an additional six years in your tax file. Ditto for home purchases: you'll need the information about the purchase price and the cost of any improvements. If you had a taxable profit (more than $250,000 for single persons, $500,000 for married filing jointly if you owned and lived in the home for at least two of the past five years), you'll also need to keep those records for six years after you filed the taxes.

And one last thing

If you're tossing documents with sensitive information such as financial account numbers or social security numbers, shred, shred, shred. If it's too much to handle on your own, look up document destruction service. Or watch for a shredding event in your community.

You can learn more about what to keep and for how long on my website, Dealing with Clutter. And the IRS has an entire publication about Recordkeeping for Individuals.

I just came home from traveling over the holidays with my family, and now have a little bit of quiet time (as in 15 minutes here or there!) to reflect on 2011 and how I want to improve my well-being in 2012. This is the time of year I often try to set resolutions for myself. And, while I don't always achieve them, over the years I have found that a few tried-and-true strategies increases the odds that I will achieve my New Year's resolutions. Perhaps they will help you too!

Next, ask yourself, "How can managing your finances help you achieve these goals?" Now you're ready to start making resolutions. Research has shown that people who actually write their goals are more likely to achieve them. So, find a pencil and get ready to write your resolutions. Writing SMART resolutions will help you achieve them. A SMART resolution is:

• Specific
• Measurable
• Agreed upon
• Reasonable
• Timed

Let's consider a resolution to save money and practice writing a SMART resolution. Perhaps you'd like to save money take a vacation. The first part of a SMART resolution is to be specific about what you want to do such as: "I want to take a vacation to visit my sister."

Next, the resolution needs to be measurable; estimate how much money it requires to accomplish your goal. For example, "I want to take a vacation to visit my sister that will cost $1,200."

Another important component of a SMART resolution is having agreement among all people involved. Thus, take time to talk to other household members who need to agree upon this resolution.

When do you want to accomplish this? The summertime is a convenient time for vacations; perhaps July 1^st would work well. You have six months to save for this goal. Your timed resolution now reads, "I want to save money for a vacation to visit my sister, which will cost about $1200, by July 1, 2012.

Now that you have a specific, measurable, agreed upon, and timed resolution, you're ready to decide if it's a reasonable resolution. If you need $1200 in six months, then you need to save $200 a month or about $50 a week. Is that a reasonable amount for you? Are there some ways you can change your current spending to find money to save?

Or, is that too much money to save each week? When you have a financial resolution that is both specific and timed, you can decide if it's a reasonable. If saving $50 a week doesn't seem reasonable, then you need to adjust your resolution. Do you need more time to accomplish your resolution? Or, could you take a vacation for less money?

Once you've set a reasonable amount, track your progress towards your resolution. Each week or so, check if you are saving enough money to meet your resolution. A handy, down-loadable worksheet to help you write resolutions is available at the University of Illinois Extension website.

This is one simple example of a SMART resolution. You can use this same technique to write resolutions about saving for retirement, paying down debt, or accomplishing finance-related activities such as writing a will. What will be your resolutions for 2012?

Have you ever started wrapping your holiday presents and realized that you bought two presents for one sister and none for your other sister? Or, how about the time you bought the same book (or CD or game) for your niece two years in a row? And, by the end of the holiday season do you really know how much you've spent OR is it all a holiday blur?

The days seem to fly by during the holiday season and being organized is a major challenge. Over the years I've tried a variety of ways to keep track of my holiday gift shopping -- often on a small pad of paper that tends to be misplaced at crucial moments. Last year I tried a holiday shopping app on my cell phone and found that there were several things that I liked about using a shopping list app:

• I could find it when I needed it – for example, when I was shopping;
• I could set-up a budgeted amount per person and quickly see how much money I had left to spend on each person;
• I could see a "grand total" of all I had spent on gifts. This was very helpful whenever I became tempted to buy "just one more thing" for someone or a special item for myself.

When I began my holiday shopping this year, I opened up my shopping list app and realized that it lacked a significant feature – at least for me. The app I had been using was only good for one holiday season. I couldn't easily add in a second year of shopping, unless I cleared all the information. And, if I cleared everything, someone was going to get the same gift two years in a row!

Well, that made me think, "What do I really want from a holiday shopping app?" In the process of exploring this, I tried out several holiday shopping list apps and realized that there are key features that are important to me.

• It must be easy to enter and modify information.
• I want to be able to set a budgeted gift amount for each person as well as a total amount for my holiday shopping. An extra bonus is if the app adds up this total for me as I enter individual amounts.
• The app needs to keep a running total of how much I've spent for each person, as well as the total spent on all gifts.
• I want a strong signal when I've spent enough on a person's gift. This is especially useful when you're buying multiple gifts for one person.
• The app needs to have some method for keeping data from one year to the next.

I'm happy to report that for 99 cents I was able to find a smart phone app that would do all of these things for me!

While many of the holiday shopping apps have much in common, they do vary. Other functions that you might like to have include the ability to:

• Categorize people such as family, friends, colleagues, etc.
• Connect to your phone contact list to add details and pictures about people.
• Track your progress with the gift; for example, shopping, purchased, wrapped, and mailed
• Lock your list with a password. Could be useful with curious kids!

Tools like phone apps can be useful to keep us on track with our finances. What would you want in a holiday shopping app? If past experience tells you that you may end up unclear about just how much you spent in December, now is a good time to find a tool that helps you plan and track your spending. Happy Shopping!

Note: I'm not listing any particular app because there are many that are very similar and availability may depend on your smart phone or tablet. To find a shopping app, try searching using key words such as holiday shopping list or gift list.

If you are using apps to manage your finances, I'd love to learn about it. Please leave a comment below. Thanks! Kathy

Go to the grocery store. Pay bills. Buy clothing online. Oh my, where has all the money gone? Do you ever feel like money keeps flowing out and you're just not quite sure where it all goes? I know I feel like this at times. Keeping track of regular expenses is one challenge; another challenge is trying to fund long-term goals such as college education for children, down payment on a home, or retirement.

If you feel baffled by your finances, you're in good company. This year's Retirement Confidence Survey found that Americans' confidence in their ability to afford a comfortable retirement has plunged to a new low. Clearly the economic situation in this country contributes to this uncertainty, but all the new ways to manage and invest our money also may explain this lack of confidence. So, what's a person to do?

When I feel uneasy about our family cash flow, I find that using tried and true financial tools can decrease my anxiety, clarify just how much money I do or don't have to spend, and help me plan for saving. For example, a budget is a financial tool that lets you take control of your finances.

To build a budget, first list all your income sources. Many people use a monthly budget (including all income received in a month) but you can choose a timeframe that makes sense to you. If you're paid every two weeks, a two week budget may make sense.

Next, list all your expenses. It can be difficult initially to know how much you spend. For some expenses, such as rent or mortgage payment, check your last bill. You may be able to estimate expenses (such as food) by looking at your checkbook register or checking account statement. To truly know where all your money goes, though, you may need to track your spending and write down all purchases whether you pay by cash, debit card, or credit card.

Typically when I talk to people about building a budget, they know how much they pay for big items, like rent, but have a hard time remembering what they purchased with the last $20 they withdrew from an A.T.M. Small purchases can add up, and you need to track these expenses. You can track your expenses on an index card in your wallet, on your cell phone, or write it down each evening. Find a method that works for you.

The goal is to have your income equal (or be more than) your expenses. If when you build your budget this doesn't work out, then you need to consider making changes. Can you increase your income? Or, are there areas where you can adjust your spending? One of the wonderful things about tracking your expenses is that it can be very enlightening. Take a look at what you're actually spending money on, and ask yourself, "is my money going towards my goals and what I value?" If not, this may provide you with the motivation to make some real changes in your spending behaviors.

Don't forget to include an expense category for savings. Plan to save money for unexpected expenses and long-term goals. If saving is not in your budget plan, it's not likely to happen.

Once you've built a budget, try it out. Then evaluate it and make changes as needed. A budget is not a fixed plan; it needs to be flexible so that you can make changes as you learn more about where your money really goes. For example, maybe the amount you originally estimated for food is too low. You may need to increase how much you expect to spend for this expense category and decrease another category to keep your budget balanced.

For more information about this topic, the website More for Your Money can help you design a budget step-by-step. If your income has decreased lately or you want to change your spending to meet saving goals, I recommend you read Setting Spending Priorities on the Getting Through Tough Financial Times website.

You may not want to keep a budget every day of your life. However during times of change or if you're worried about your finances, a budget is a useful tool to ensure your money is going towards the things that are important to you, including saving for long-term goals.

Treasurer offices across the United States have been left holding the bag; the bag with your unclaimed property in it! Each year, millions of dollars of unclaimed or abandoned property is turned over to state treasurer offices across the country. To date, it is estimated that over $32 billion of unclaimed property is waiting to be found. In Illinois, our treasurer's office has been going around the state educating the public and in many cases helping them find their unclaimed money.

I usually go to Illinois' website, CashDash and check to see if I or anyone I know has unclaimed money. Recently, after checking in all the names I may have used, I discovered that I had a missing rebate from a utility company. I also found money for several family members and friends. When I told others about what I had done, some were skeptical and thought that it may be a set up for bill collectors to locate them. So I decided, maybe it would be a good idea to explain what unclaimed or abandoned property means.

Unclaimed property, also referred to as abandoned property, refers to accounts where a financial institution or company has been unable to reach the owner of the property for a year or more. To assist, each state has an unclaimed property statute which prevents your property from going back to the company just because they have lost contact with you. "Companies are required by law to send funds from lost accounts to the state of the owner's last known address. That means you could potentially have unclaimed property in every state that you have resided," according to the unclaimed property website.

Typical unclaimed property might include:

• Bank accounts
• Stocks, bonds or mutual funds
• Uncashed checks (payroll, interest, dividends, tax refunds, etc.)
• Proceeds from life insurance policies
• Overpayments or security deposits, or refunds on utility accounts
• Contents of safe deposit boxes

State treasurers' offices and officials have made great strides to locate property owners through public service announcements and awareness campaigns, website efforts, and much more. To aid in this effort, the National Association of Unclaimed Property Administrators (NAUPA) has established a website which makes it easier to search for your unclaimed property by providing a link to state databases all over the country. If you'd like to search for property for yourself or someone you know, visit their website at www.unclaimed.org and at a commercial website that they endorse www.missingmoney.com . Use of both websites is free to the public.

How much does it cost to get unclaimed property returned?

Generally, there are no fees or nominal fees associated with reclaiming your lost property. There are businesses that have been formed around locating lost property. If someone contacts you about paying a fee for the return of your lost property, do not respond to them. If you have lost property, you can visit one of the websites previously mentioned to claim your lost property without paying a fee other than the ones that might be assessed by your state's unclaimed property division.

How can you keep your property from being lost in the future?

Most of the time, property goes unclaimed because the company no longer knows how to locate the appropriate owner. To prevent this from happening to you, you should:

• Notify your financial institutions and other companies you do business with each time you have a change of address or change of name;
• Cash payroll, refund, interest and dividend checks in a timely manner;
• Keep a record of the contents of your safe deposit boxes and give a trusted family member or friend an extra key; and
• Create a will to outline how property should be distributed.

So, has all of this made you think that you may have some missing money out there? If so, visit one or both of the websites mentioned, you might be surprised by what you find. Happy hunting. Until we talk again...

Do you use your debit card daily? Do you check your bank balance online? Do you bank using a smart phone app? The pace of change in the financial world is dizzying. New isn't always better, but I do like learning new ways to simplify my financial life.

It can take awhile to adopt new habits, but often new technology can save time and help you manage your finances more easily. I'm comfortable using new technology to do the following tasks with money, Have you tried these?

• Withdraw cash from an ATM versus from a bank or credit union teller.
• Pay bills using an online payment system rather than mailing a check.
• Compare prices for purchases on the Internet instead of driving to a variety of shops.
• Pay for purchases with a debit or credit card rather than writing a check or carrying cash.
• Sign-up to have regular bills (such as mortgage and insurance payments) automatically debited from your checking account.

The place I do most of my banking is a local institution. However, my college-age sons use an online bank that does not have a brick-and-mortar location; this works well for them. An online account can be very helpful to people who live in different locations during the year whether they are college students or snowbirds. Plus, it's available 24/7.

Recently I've added these new financial practices to my life. You might like to try these too.

• Transfer money from one financial account to another using an electronic transfer.
• Receive bills online rather than through the postal mail.
• Deposit a check to an account with a smart phone app that takes a picture of the check.
• E-file federal tax return.

Do you use the self-serve checkout at the grocery store? One of our local grocers has this option, but I still feel very uncomfortable using it. Every once in awhile, when I have just a few grocery items, I practice using the self-check system again. Financial habits, like most habits, take time to become accustomed to and require practice. Can you identify a financial habit or two that you'd like to add to your life? Here are a few more to consider.

• Check financial account balances using a smart phone app or with a phone call.
• Use an online budget website to track and budget expenses.
• Use chat services online to resolve a problem with a purchase.

Not all new ways of handling finances fit each person's needs. It's wise to evaluate both the pros and cons before adopting new practices. But you may find that newer ways of doings things pay dividends. For example, when you manage your financial accounts online, you're free to shop for better interest rates even if the bank is in another state. Having bills automatically debited from your checking account can assure that you never pay another late fee. In our complex daily lives, finding ways to simplify our financial "life" is a plus.

Use the Comment link below to share new financial habits you've developed and to suggest ones I might like to use too!

The new unemployment numbers for last week came out this morning, and the news was disappointing: There were 412,000 applications for unemployment benefits last week, an increase of 27,000 over the previous week. It is a reminder that many of us are still in financially difficult times. Maybe this is a good time to review some of the things we can do to minimize the financial fallout from layoffs, reduced hours, and other events that hit us in the wallet.

1. Figure out how much you spend and how much income you have. You can't plan changes until you understand the current situation. So pull out the bills, receipts, and checking account statement from the last month or two. Use that paper trail to make a guesstimate of how much you've been spending in different categories. Then, project how much you will spend going forward. The budget sheet from our Getting Through Tough Financial Times website gives you columns for "before" and "after."
2. Know what you can change, and what you can't. Fixed expenses – ones that are the same every month like your car loan payment and the cable TV bill – often involve a contract and are harder to change than flexible expenses such as groceries, clothing, and entertainment. So tackle the flexible expenses first. For ideas about how to reduce different types of expenses, check 66 Ways to Reduce Expenses or 101 Ways to Save Money from the Alabama Cooperative Extension System.
3. Don't get caught off guard. Not all expenses come monthly. My water bill comes every other month; my car registration comes once a year; auto insurance is once every six months. Then there are seasonal expenses, like holiday gifts and back-to-school clothes and fees. The real killers are unexpected car repairs and the like. Make yourself an annual calendar of seasonal and periodic expenses, and a guess about "unexpected" expenses using this simple form. Post it where you can see it, so these upcoming expenses won't be surprises.
4. Know how much you owe. For each debt, make a simple chart of who you owe, the payment amount, the total owed, the interest rate, and whether or not the loan is secured by one of your assets. For example, your car loan is secured by the car; the lender can take the care if you don't pay. Use the online PowerPay tool to figure out how long it will take you to pay off those debts. PowerPay will help you map out a plan to pay your debts off faster. See how much faster you'll pay off bills by paying just a few dollars more per month. When you pay off one bill, add the amount of that payment to the debt with the highest interest rate.
5. Decide which bills are most important to pay. If you can't pay all your bills, prioritize. Compare the consequences of not paying different bills. Top priority is usually protecting your family and keeping a roof overhead. If you need your car to get to work, your car loan may come first. While most debts can be resolved through bankruptcy, child support, income taxes, and student loan payments cannot
6. Contact creditors if you can' pay. First, figure out how much you could pay. Then, call the creditor and ask them to work with you. Not all creditors will give you a break, but some will.
7. Get help if you need it. Credit counseling can help you work out agreements with lenders and get things back on track. Look for a credit counseling agency by contacting the National Foundation for Consumer Credit at 1-800-388-2227 or www.debtadvice.com.

It's easy to put off making changes in our spending. You may be thinking, Maybe we'll find work soon, or, I don't want the family to suffer. But the sooner you make adjustments, the better it will be for your family down the road.

How have you adjusted to get through tough financial times? Click on my name below to send me an email with your best tip. I'll share those in a future post. In the meantime, check our website for more detail on the ideas I've shared here, plus lots more about Getting Through Tough Financial Times.

We all want to "do the right thing" with our finances, but sometimes it's hard to know what the right thing is. A question recently came to me about a person who has large student loans and credit card debt. She is working in a low wage job, not yet able to find a position in her field. She's living with a friend and has kept current on all her debt payments. She even manages to have just a little extra each month (amazing). Her question is, what's the best thing to do with that money? Put it toward student loans? Pay extra on her credit cards? Start an emergency fund? Or start an IRA and put it toward retirement savings?

Student Loans

Student loans are one of those special debts that never go away, even if you file bankruptcy. There are certain circumstances where some of the debt might be forgiven, but by and large, you're going to pay those loans no matter how long it takes you. So wouldn't it make sense to use any extra money to pay down those obligations? Maybe. But one rule of thumb when deciding which debt to pay down first is, Attack the debt with the highest interest rate first. Her student loans probably have lower interest rates than credit cards. Plus, she may be able to get a tax deduction for student loan interest. So student loans may not be the best use of extra dollars.

Credit Card Debt

Paying off credit card debt is a very good thing to do, especially if you have a high interest rate. But today, there's the possibility of unintended consequences. In the old days (pre-2008), credit limits only went in one direction: UP! Therefore, when you paid down your balance, you had more available credit. If your credit line was your emergency fund, paying down the balance gave you more available credit to tap.

In 2008 and 2009, that changed. Judging by the number of complaints I've read and heard, lots of people saw their credit limits cut. Some said that the reductions in credit limit seemed to be their "reward" for paying down the balance. So, yes, they had less debt after paying extra on the credit card, and they reduced the amount of interest they were paying. But the reduction in their credit limit meant that they had less available credit to draw on in an emergency. Therefore, a person had to choose between paying down debt and building an emergency fund.

It's hard to say how likely credit cards are to reduce credit limits today. I found some recent complaints online, but I did not find any authoritative source talking about current trends or statistics on this. Since cutting credit limits has been a recent pattern and this person's financial situation sounds precarious, caution may be in order.

Emergency Fund

I would vote for building a small emergency fund first, rather than putting every available dollar toward the credit card balance. She might split her extra dollars between the two goals. It's a trade-off between paying more in interest now and the security of having some liquid (accessible) funds. Once she has at least a small emergency fund, any extra cash could go entirely toward paying down the credit card debt.

There are several acceptable options for where to keep an emergency fund. I discussed these in a June 2008 post.

Retirement Savings

The standard recommendation is to pay down debt - especially high interest debt - before putting money away for retirement. That assumes that the person will actually pay down the debt, and not just charge up the credit cards again. I once encouraged a friend to sign up for his retirement plan at work even though he had credit card debt. I knew him pretty well, and I did not believe that he would ever pay off the credit card. As a result, he might never save any money toward retirement if we followed the standard advice.

Fifteen years later, he still had credit card debt. But he also had a substantial amount in his retirement account.

If this woman is disciplined and serious about paying down her debt, the standard advice might work for her. Once her credit card debt is paid off, she can decide whether to devote that amount each month toward student loan debt or to retirement savings. Things that could tip the balance would include the interest rate on the student loans, whether her employer offers matching on her retirement contributions, whether she has any income tax liability and, if so, whether she qualifies for the Saver's Credit. If she owes no tax for the year, she gets no benefit from the Saver's Credit or from contributing to a traditional (tax-deferred) retirement account.

She might consider a Roth IRA. Her contributions are are not deductible, but qualified earnings will be distributed tax-free. She could actually take out her contributions at any time without tax or penalty, allowing the account to function as a last-ditch emergency fund.

Using her extra dollars for any of these choices will be a good thing. By evaluating her choices, she may be able to get a little more bang for her buck.

What would you do? Click on my name below, and send me your thoughts. We'll feature your ideas and comments in a future blog post.

Related posts:

• Taking control of holiday credit card debt
• Contact Your Creditors Before You're Late
• Who Me? Ready to Save for Retirement?

• Meet the New Superhero: Your Emergency Fund!

You have probably seen the Capital One commercial that asks the question "What's in Your Wallet?" To my surprise, many people are walking around with a lot of information that should not be in their wallet. This summer when I was doing a credit workshop with young adults ranging in age from 18-24, I asked "by a show of hands, how many of you carry your social security card in your wallet/" Not surprisingly, quite a few carried their social security card around. Those who knew better immediately shouted out, "you shouldn't carry your social security card in your wallet because you may become a victim of identity theft." I was pleasantly surprised to hear that a portion of the students knew that.

One of my colleagues, Susan Taylor, has an activity that she does with her program participants. She has them make a list of what they think is in their wallet. After completing the list she has them to actually look in their wallets and write down what they find. To her surprise, one of her participants was carrying around his discharge card from the military. He had been discharged honorably from the armed forces many years ago. Because his discharge took place during a time that we innocently placed the social security number on the card, had his wallet been stolen, although his social security card wasn't in the wallet, his social security number would have been easily accessible to a criminal (via the discharge card).

In 2009, it is estimated that 11.1 million people were the victims of identity theft. The total fraud is estimated at about $54 billion. Although identity theft can take place in various forms, the most prevalent way is usually via the items contained in our wallet. The Identity Theft Resource Center has a list of items typically found in many Americans' wallets. The list includes:

· Your Social Security card **

· Military ID card **

· Medicare or MediCal card **

· Social Security cards (or numbers) for any other family members, i.e. spouse, children

· Social Security number (SSN) printed on card

· Driver's license

· Credit cards (itemize)

· Vehicle registration papers

· ATM/ Debit cards/ Bank cards

· Health insurance/prescription/dental benefit card - Did it have your SSN on it?

· Professional licenses (doctor, nurse, etc.)

· Employee or student ID card - Did it have your SSN on it?

· Green card or immigration papers

· Passport

· Any bills/statements you may have been carrying (i.e., telephone, electricity, credit card)

· Birth certificate

· Store club cards (supermarket, Sam's Club, Costco)

· AAA or other auto insurance card

· Library card

· Video store card - (i.e. Blockbuster)

· Health club card - Did it have your SSN on it?

· Discount cards or annual passes (movie, amusement parks)

** Government-issued card with Social Security Number printed on it

One item they left off the list that is likely found in your wallet is your checkbook. When a theft has access to your personal information, they can do a lot of damage. To help alleviate some of the stress of figuring out what information is kept in your wallet, Susan gives her program participants homework. She provides them with a handout that asks for card information and contact numbers. As the information changes, the list should be updated. This list should be stored in a safe place such as a fire-proof safe.

I know most of you know if your wallet was stolen to alert the police, your banks, credit card companies and the credit bureaus to name a few. Susan says most people don't think to alert their local library. Some victims have been shocked to discover that their library card was used to check out books, CDs and DVDs. During the next tax filing season, it is also a good idea to check with the IRS to verify that no one else has worked under your social security number. I have heard horror stories of people applying for unemployment and being told that the system currently shows them as working.

This blog was written to give you some ideas of safety measures you can take to lessen your chances of becoming a victim of identity theft. If you are carrying around your entire financial lifeline in your wallet, you should do one of two things: 1) take out the cards/ information that you don't use or 2) make sure you keep records of all information kept in your wallet so you know who to contact in case of emergency. So, now I ask you "What's in Your Wallet?"

If you would like more information on identity theft, check out these websites:

Thrifty Living

FTC

Identity Theft Resource Center

Do I really think it's possible to make doing taxes less tedious? Well, honestly, no. But, I do think you can look for ways to reward yourself by finding money, clearing paper clutter and organizing your finances for 2010.

The next two weeks will find many people scrambling to finish calculating their taxes! I've made that 11:59 p.m. run to the post office on April 14th before -- have you? Do you need a way to motivate yourself to finish this task? Well, here are three suggestions that just might be the motivation you need!

1) Find Money. When working on your taxes, explore the many tax credits that are available. Finding a tax credit that applies to your financial situation is like finding a treasure chest of money! A tax credit that saves you $300 (for example, on the cost of an energy efficient window) is $300 less taxes you need to pay.

The American Recovery and Reinvestment Act of 2009 created new tax credits and changed eligibility levels on other tax credits. Don't assume that you don't qualify! Check out tax credits available for education, new vehicle, children, as well as others. For a convenient list of tax credits, visit the IRS website's "ARRA Information Center."

Be sure to not miss the earned income tax credit. The (EITC) helps people who work but earn modest incomes. The tax credit you can receive varies depending on your income and the number of children you have. New tax rules have increased the EITC. For example, married filing jointly households earning $48,279 or less with three or more qualifying children may be eligible for a tax credit up to $5,657. Visit the IRS website for more information. If the EITC amount is more than the taxes you owe, then you may receive a cash payment

While looking through your financial paperwork keep an eye out for costs that you don't want. For example, on my credit card summary I found some reoccurring memberships that I had forgotten about as well as a monthly fee for a service I don't recall signing up for! Cancelling these services will save me money in 2010.

2) Throw Away Paper Clutter. A rewarding aspect of preparing taxes is being able to throw away many of the papers that have accumulated over the year! Save things that:

• prove what was done (for example, job contracts),
• remind you of what you have (receipts for large purchases), and
• protect your assets (mortgage paperwork and statements from mutual funds, banks, etc.)

Throw out those records that have expired, been replaced, and are no longer important to you. For example, if an annual statement from a mutual fund contains all the information that was originally sent to you quarterly, discard the quarterly statements.

Keep a copy of your income tax returns and supporting documents for at least six years. You may need even older tax records if you own a home, have a non-deductible IRA contribution, or you have business or rental property that depreciates over a number of years. For more information, check the IRS Publication 552, Recordkeeping for Individuals.

3) Organize Your Finances for 2010. Set-up a filing system that works for you. At a minimum, designate a folder called "Current Year Taxes" for papers (or electronic files) that will help you prepare your 2010 taxes. For more information about organizing your financial papers, visit University of Illinois Extension's website, "Dealing with Clutter."

Taking these steps may not make paying taxes fun, but at least it will put a positive spin on the activity. See how much money you can save and just how much you can add to your recycle bin while completing your tax forms this year.

How do you take the tedious out of taxes? Send me your suggestions by clicking on my name below; I'd love to hear your creative ideas!

It comes around every year, but it still catches many of us off guard: tax season. So it's time to pull together all the info that you or your tax preparer will need to complete your 1040, 1040A or 1040EZ.

If you find yourself scurrying each year to find records of your donations, business expenses, IRA contributions, or child care payments, this would be a great time to get prepared for NEXT year.

How big is the stack of documents that you use to compute your deductions and prepare your taxes? If your stack is just a few sheets of paper, all you need is a single file folder or envelope. Label it "Current Year Taxes" and put it somewhere handy, preferably close to where you open the mail

Also set up a file folder on your computer labeled the same, Current Year Taxes. Rather than printing documents that you might misplace, you can drag and drop them into their own place on your hard drive.

Throughout the year, whenever you receive a document you MIGHT need when you file your taxes, drop it into the Current Year Taxes folder.

If your situation is more complicated - maybe you have a home-based business or your have numerous investments that generate taxable income - you may need an accordian file or a directory on your computer. Look for natural groups of information to determine the labels for the divisions in your accordion file or your directory. Some might be:

• charitable donations
• investment income
• depreciation records
• utility bills (for a home-based business)
• college expenses

Once this year's taxes are done, move the electronic and paper files to a new folder labeled "Taxes 2010." Now, you're ready to put this year's documents into the Current Year Taxes folders. Next year, it will be a piece of cake.

I don't usually get too excited about making New Year's Resolutions, but this year I felt that there were some changes I needed to make. Maybe you feel the same way.

If your goal is to get your financial house in order during 2009, I may have some tips that will help. I was recently invited to speak to a group who wanted to know how to manage their finances during the current economic situation. I shared with them what I think are the ten things everyone should do to protect themselves from major financial mistakes, prepare for the future, and keep things simple in the process.

You can scroll through the rules in the graphics window, above. If you'd like your own financial rulebook with more explanation, you can print out this downloadable file.

Happy New Year! And I wish you much success with living your new financial life.

Rule #1: Pay your bills on time.

Rule #2: Save something every payday.

Rule #3: Plan for surprises.

Rule #4: Keep track of expenses.

Rule #5: Make your credit card work for you...not the bank.

Rule #6: Know how much you owe, and how much you own.

Rule #7: Protect the important things.

Rule #8: Use your financial power wisely.

Rule #9: Write down your financial goals.

Rule #10: Get help when you need it.

Happy Holidays! I hope everyone is enjoying time with friends and family. Amidst all the chaos and excitement of the holidays, I have been feeling like I'd like to simplify some aspects of my life. Chaos and change, in short bursts, can be invigorating. However, when it comes to finances I prefer simply and boring!

Here are my three favorite ways to simplify my finances.

1) Sort your mail everyday. I use a small, hanging file folder organizer so that as I open mail the bills go in the "Bill" folder; financial statements go in the "To Be Filed" folder, and school notes go in the "School" folder.

Of course, trash goes in the recycling bin. Sorting mail everyday keeps paper from accumulating and means I can find my bills easily when it's time to pay them. Remember approximately 60% of your credit score is whether or not you pay your bills on time – being organized can help!

2) Put your savings and investments on automatic. Decide how much you want to save each month (or paycheck) and set-up a system that will automatically take care of this for you. You may want to use payroll deduction to fund a 401(k) plan at work, or deposit money into a savings account or directly into a mutual fund. What's important is to remove the frequent decision-making -- save or not, where to put the money, etc.

3) Reduce the number of bills you receive. Too many bills mean it's easy to lose track of where you spend you money and who needs to be paid. Try using fewer credit cards. Consolidate accounts when it makes sense – for example, having one provider for services such as cable TV and Internet or combining savings accounts with relatively small balances at different financial institutions into accounts at one financial institution.

Do you have a favorite way to simplify your finances? Click on my name below to share your ideas. I'll post ideas shared to this blog so that we can all benefit.

Interested in other finance-related blogs? Check out this post and others on the Carnival of Personal Finance hosted this week at the Fraud Files Blog.

Do you feel like the financial world is spinning out of control? I feel like every time I pick up the newspaper or read a blog that another financial disaster has occurred. I do think our national economic situation is very shaky right now, but I don't like feeling that the world is ending!

What can a person do? Most of us can't do anything about the stock market or stupid lending practices or the dollars' value on the world market, but we can take control of our own finances.

Now is a good time to go back to the basics and be sure that our financial life is in order.

1. Make bill payments on time. This has the biggest influence on your credit report score.

2. Take time to review your insurance policies and be sure that you are well covered. Comparison shop to be sure that your policy is providing the best coverage for the money you spend. One way to save money on premiums is to increase the deductible that you pay before the insurance company pays. Only do this if you can afford the higher deductible.

3. That brings us to emergency funds -- how is yours? Typically financial professionals recommend enough money in your fund to cover 3-6 months of essential spending. If you don't have this much money saved up, now is a good time to start! Check the Plan Well, Retire Well website for tips on how to get started or to increase your saving.

4. Pay down your credit. With the economy shaky, now is a good time to lower the amount of credit debt you have.

5. Stay with your investment plan. Historically people who have stayed in the stock market when the overall value is going down (rather than pulling money out) have done better in the long-run. You can check if your investments match your asset allocation goals. If not, then slowly make changes.

6. Take care of home maintenance. For most people their home value is an important part of their assets. Don't put off home maintenance so long that it costs more to fix the problem later!

While these six steps aren't "rocket science," they are positive steps that each of us can do to take control of your finances.

There are times when managing my finances doesn't get in the way of the rest of my life. And then there are times when there's just too much going on, and I want everything in my life to be simpler!!!

I can set up many of my bills to be automatically deducted from my checking account, or even billed to a credit card. I'll never be late paying, but I have to be absolutely certain that there will always be enough money in the account to cover the bill. Also, these agreements have to be cancelled and re-established if you change checking accounts.

If they are billed to a credit card, I'd better be paying that card off in full every month. If I don't, I've just added a lot of interest charges to my monthly bills even though I "paid" them on time. And every couple of years, I have to provide new credit card information for each of these bills, because the old card expired.

I am partly responsible for handling my father's finances. Having most of his bills automatically debited from his checking account means my sister and I will never slip up and forget to pay. That would be embarassing to explain to my dad.

My investments are pretty much on auto-pilot. I have money taken out of each paycheck for my 403(b) retirement account. Once a year, I look at my investments to see whether the balances still match the asset allocation I've chosen (XX% in large US stocks, XX% in bonds, XX% in foreign stocks, etc.) If not, I either shift money from one investment to the other (that's known as rebalancing) or adjust how my new contributions will be invested. Some retirement plans now offer automatic rebalancing. That would work best if all your money was in one account, but my husband's and mine are spread across his 401(k), my 403(b), and two IRAs. So for now, there's no automatic rebalancing for me.

I have simplified our investments by choosing mostly index mutual funds. Unlike actively managed mutual funds, I don't have to worry if the fund manager changes or watch to see that the fund doesn't gradually change it's spots (i.e., small US company stocks) to stripes (mid-sized or larger US company stocks). An added benefit is the lower costs of index funds compared to others.

Some of the things that make our financial life more complicated are a result of my stinginess and desire to maximize the benefits I get. We have one credit card that pays a higher rebate for groceries, gas, and prescriptions. We have another credit card that pays a higher rebate for travel expenses and dining out. We pay both off each month, so we don't have to worry about whether we're incurring interest charges to get these benefits. But then one of the cards will change its rebate structure. Or we're driving into Canada and I'm trying to remember which one charges less (or maybe nothing) extra for foreign purchases. You can drive yourself crazy with this stuff!

Shopping online can be a time saver as well as a money saver. But sometimes, I can spend 45 minutes comparing shipping, sales tax, and price - when it only makes $3 difference in what I pay. Did that simplify my life any?

I still balance my checkbook, and check my credit card statements against my receipts each month. I even download those statements into a software program that lets me see where our money is going. That will go smoothly until next time I have to upgrade the software or open a new financial account that I have to set up to access via the software. I thought about giving this up. But when you start worrying about being laid off, or think about retiring, having real numbers about how you spend your money is valuable information.

Do you have tips about how you're simplified your financial life? Please share! Click on my name below and drop me an email. I'd appreciate hearing from you.