Alright, now that Christmas is done, you’re probably ready to call it a year, and try to catch your breath as you wait for 2012 to roll around. I understand the feeling; it’s been a pretty long year, after all, and this week between Christmas and New Year’s Day is one of the best chances that most of us have to relax, refresh, and regain our sanity (those of us who had any of that to begin with, anyway). Yes, it is a nice time of year.
Unfortunately, though, there are some things that you need to do before the end of the year to ensure that your finances will be in good shape for the start of the next year. Here are some of the actions to perform this week to whip your accounts into shape for 2012:
-Make Last Minute Charitable Contributions: While I imagine most people have been giving throughout the year to assorted charities, we are getting down to the wire for contributions that you can deduct on your 2012 taxes. (Assuming you opt for itemizing your deductions, at least.) Add in the whole charitable season of love and brotherhood, and now is as good a time as any to make a donation.
-Convert Your Traditional IRAs to Roth IRAs: 2011 is the last year in which you can convert your Traditional IRA to a Roth regardless of your income, so it’s well worth sitting down and spending an hour or two of the last few we have in 2011 to see whether making such a switch would be the best for you (be aware, it might not be). If you decide such a conversion is right for you, you’ll have to let your brokerage know and start the conversion, ASAP, as well as providing money from outside the account to pay the taxes on the conversion (to get the full benefits of converting). On that note:
-Max Out Your IRA: Regardless of whether you stick with a traditional IRA or switch to a Roth, you’ll likely want to max out your contributions for 2011, or get as close as possible. There’s not such a rush on this point; you have until April 17th to make retroactive contributions for the tax year 2011. That said, given that you will probably already be contributing for 2012 by then, and that April 17th, 2011 also happens to be Tax Day, it’s probably good to consider doing what you can right now.
-Start Preparing for Your 2012 Taxes: While we’re talking about taxes, there’s plenty that can be done to help insure that your tax preparation is as painless as possible (besides fleeing to a tropical paradise and never returning, of course). You can start gathering up paperwork, from your paystubs to your charitable donation records, that you will need for your taxes and put it into a special folder (or other secure location) for tax preparation time. As your financial institutions send you the rest of the relevant data (in late January to early February, in my experience), you can add to your stash and know exactly when you can start to fill out your tax forms.
-Make Your Goals (Financial and Otherwise) for the Coming Year: It’s nearly a New Year, and that means it’s nearly time for resolutions. While you don’t have to (and probably shouldn’t) wait for the year to roll over before you attempt to improve your life, it is nice to know that other people are trying to improve their lives at the same time as you. There’s any number of goals you could choose for the next year, from paying off debt to building savings to adding more side income. As you make these goals, try to break them down into smaller ‘mini-goals’, ones that you can complete monthly, weekly, and even daily; it’s much easier to focus on paying down $200 of credit card debt each week than, say, $10,400 over the course of a year (even if they are same amount mathematically). I made some resolutions for 2011, and they’ve helped spur me along for most of the year.
These aren’t the only things you should be considering as 2011 draws to a close, of course, but should give you a pretty good guide to some of the issues to consider, and help you to come up with your own 2012 Countdown To-Do List. Good luck, and here’s hoping you have a great 2012!