Five Financial Chores to Start 2007 Fresh

A lot of people live for the "last minute," the only time when they seem to get everything done. But when it comes to looking at the calendar, some of your year-end financial chores are really about the "first minute," about starting the new year with a financial slate that is as clean, prepared and hopeful as your list of resolutions.

To get the new year off to a good financial start, consider having the following chores either finished by the time Jan. 1 rolls around or ready to be achieved in the first minute next year. Failing to get them done now, there's a scary chance that most of these activities will fall to the last minute of 2007, and they won't be any easier then.

1. Check your credit report

This is fast, easy, necessary and worth doing at least once a year with each of the three major credit bureaus.

The good news is that the law now requires each of the credit bureaus to give you a free copy of your credit report once every 12 months. In complying with that law, Experian, TransUnion and Equifax got together to sponsor, an all-in-one spot for getting your data..

There are two schools of thought about checking your credit report: One holds that you should look at one report every four months, so that you can see the most recent activity, make sure any changes or corrections have been implemented — that data is shared by the credit bureaus — and not let months pass without a review of inquiries and account activity. This is a good precaution against identity theft, where one sign that you have been victimized is new credit accounts that you never signed up for and that use an address different from your own.

While that kind of action might be ideal, the other school of thought goes like this: If you aren't going to do the follow-up and get a report every four months, get them all at once. This way, you have a chance to do a thorough, all-in-one review. Either approach is better than nothing.

2. Clear out the financial paperwork

The end of the year is a great time to sort through old bills, especially if you never got around to actually filing them away, so that you keep only what you need.

In many investment accounts, for example, the December statement reviews all transactions for the year, meaning you can file away that one paper and toss out the statements from the previous 11 months. The same goes for check stubs. The last one of the year has all the data needed for tax purposes.

Bills for department-store and service-station charge cards, as well as general-purpose credit cards, generally can be tossed once they are paid (unless you expect to return something and want the charge number to use in place of a receipt). Household utility bills also should wind up in the shredder, unless they have some value come tax time (which they might if you run a business from home). Canceled checks fall into this category too.

Put each piece of financial paperwork to the following quiz: 1) Have I ever needed this type of information before? 2) What am I keeping it for?

If there's no tax reason to hold the document, and you can't envision needing it — or if a replacement copy is available in the unlikely event you do — toss it.

3. Calculate your net worth

This is a good chore for December or January because it gives you a regular measuring stick to which you can come back for comparison in the future. Some people like to use December statements to get an end-of-the-year picture, others like January statements for a starting point for future growth.

Either way, the calculation is simple; add up everything you own, then subtract everything you owe. The result is a financial snapshot of where you stand.

The plus side of your ledger should include the value of your possessions, your home, car, bank accounts, investments, the cash value of life-insurance policies, retirement assets, and personal property. The down side should factor in all debts including current bills; mortgage; personal, credit-card or installment loans; and unpaid taxes.

Subtract the debts from the assets to see what you are worth today, and what would be left if you "cashed out" your assets and paid off all your debts. A good online tool that covers all the relevant details is available free at

4. Make (or update) a household inventory

"Inventory" conjures images of drudgery and tedium, but making a record of your belongings and possessions does not have to be a horrible chore. What's more, lacking this kind of record puts you at risk that an insurer will not compensate you adequately for losses in the event of a disaster.

Your inventory should contain as much detail as possible about purchase dates and prices, current value of an item and more, but it does not have to be a written record. Take a video camera and walk from one end of your home to the other, making a travelogue of everything you see.

You can do some double duty and spice up the commentary with any additional instructions for your relatives, like which niece gets the heirloom painting. And having your kids, especially adult children, make the inventory with you gives you a good opportunity to discuss what you own and to tell stories that imbue certain items with personal value.

If you prefer to take a written inventory — and they are easy to update, copy for your insurance agent and fit in a safe-deposit box — check out, a Web site created by the Insurance Information Institute. It features a free software program that will make it easy for you to complete the process.

5. Express your final wishes

You may not want to think about your own mortality at this time of year, but expressing personal final wishes will ease the burden on loved ones if 2007 turns out to be the year you fail to complete.

The best form I have seen to help people express funeral and other desires is "Your Wishes," which is available at It is built to be updated, making it ideal for a younger person with just a few ideas of what they want now.

While picking up "Your Wishes," you can also take care of other crucial chores, ranging from specifying wishes on organ donation to completing the "Your Way" guide, a much more detailed instruction booklet to leave relatives in later years.

Copyright (c) 2006 MarketWatch, Inc.