By Amy Higgins
Enquirer contributor

JANUARY

Get organized!

Just what exactly does "getting finances in order" mean to you? Take the next few days to figure it out. Sit down, pencil in hand, and make a list of what you want to achieve financially this year.

"Once the goals are articulated and prioritized, then you can go about developing a game plan for accomplishing them," Ritter said.

Most common financial goals are saving more and spending less, opening investment accounts, and planning for retirement or college educations.

Once you have your goals set out, prioritize them and plan how you are going tackle each one in turn. What follows for the remaining 11 months of the calendar is an example of such a plan.

FEBRUARY

The battle of the budget

The lament is all too common: "Where does it all go?" Take this month to figure out where you are spending your money - and what expenses you can cut out.

"The best resolution is to plan to spend less than you earn," said Jack Gambetta, an independent financial planner in Terrace Park.

First, carry some paper and a pencil around with you this month and write down everything you spend. Everything. Even if it's just 55 cents for a can of pop, write it down.

At the end of the month, look at where your money went. Then start figuring out whether you really needed it to go there. Did you have to have that pop, or would water have sufficed? Did you really need, or just want, that new sweater? Did you treat your friends to lunch without them reciprocating?

You'll be amazed at how much you throw away every day. It might seem like only a few cents at the time, but it adds up. Had you saved that 55 cents a day from pop, you would have close to $201 at the end of a year.

Next, look at larger expenses you can eliminate or replace with "creative" solutions. Treat it like a game, how to beat the system by finding a cheaper way to do it.

Check out a movie, book or tape from the library free instead of buying or renting. Cancel or downgrade cable, Internet or cell phone services you can do without. At the very least, shop around to see if you can get better rates at a competitor.

There are always cheaper ways of living the good life - make it a quest this month to find out what they are.

Whatever you do, don't spend money to help you save money. Don't buy a book or join a service until you've exhausted other free avenues. The library carries tons of books and magazines to teach you more frugal ways. Community groups, like Smart Money and Consumer Credit Counseling Service of Greater Cincinnati, also offer help getting on and staying on a budget.

MARCH

The tax man cometh

You might not want to wait even this long to get your taxes filed and receive your refund. With about 80 percent of taxpayers expecting a refund - and with the average refund above $2,000 - why wait another day?

Take this month not only to get back what's coming to you - but also to work on ways to lower your overall tax bill. Make sure you're using the right forms, for example.

"There are people who should be itemizing that take the standard deduction," IRS spokesman Chris Kerns said. "It's just a lot easier to fill out the short form and take the standard deduction."

But a little extra time and effort could save you hundreds of dollars. Home mortgage interest alone typically gives you a larger amount to deduct from your taxable income than the standard deduction. And if you're in the 25 percent tax bracket, then every $1,000 deducted from your taxable income saves you $250 in federal income tax.

Also don't overlook deductions for student loan interest, education costs, unreimbursed employee expenses, medical costs and charitable contributions.

"All those things add up," Kerns said.

But those things also add to taxes being so complicated. More than half of American taxpayers use professional preparers to file their taxes - but make sure you don't spend more than you have to for their services.

Tax information and assistance is available free from the IRS and some community organizations, such as some churches and senior centers.

APRIL

Retirement savings

April is retirement savings month because you can still make contributions to a traditional IRA or Roth IRA that count toward 2003 until the income tax filing deadline of April 15.

That means if you wanted to, you could in April put away for your retirement $6,000 - up to the $3,000 limit for 2003 plus the $3,000 limit for 2004. (Savers over 50 can contribute an additional $500 per year.)

Also take the time this month to examine your 401(k) or 403(b) contributions. Now is the perfect time to adjust the contributions that are withheld from your paychecks - especially if you just got an income tax refund.

Remember that getting a refund means you overpaid your taxes all of last year, giving the government an interest-free loan. To make sure it goes in your pocket without the governmental detour, increase the number of exemptions you claim on the W-4 form filed with your employer's personnel department. This will lead to less tax being withheld from each paycheck. (The IRS Web page, www.irs.gov, has a great withholding calculator that can determine the number of exemptions you should take.)

Then, adjust your 401(k) withholding to account for those extra dollars, so that they are funneled into your coffers and not Uncle Sam's. Done right, your paycheck can come out the same and you are still forcing yourself to save - only this way, you get the benefit of long-term market returns.

MAY

Take a whack at your credit cards

The average American is carrying $2,294 in credit card debt, according to the annual credit card survey by Myvesta.org, a nonprofit consumer education organization.

Take this month to work on paying off that debt - or at least implementing a plan to pay it off.

Having set yourself up on a budget in February, you should have spending under control by now. One way to make sure you're sticking to your budget is to stop using the credit cards. Switch to debit cards so that you are only buying what you know you can afford.

Next, make a list of all your outstanding balances and their interest rates. Rank the debts in order of highest interest to lowest interest.

Then, see if you can lower any of the highest interest rates, either by asking the credit card company for a reduction or by transferring the balances to lower-interest accounts.

After paying the minimum owed on each of the balances, put the extra you can afford toward the top-ranking debt on your list. Systematically move down the list as each gets paid off.

JUNE

The question of homeownership

Besides being part of the American dream, owning a home can be the single biggest expense of your life. And your best investment.

So take this month to educate yourself on what it takes to buy a house - or how to get the most out of the one you already have through refinancing or home equity loans. And with mortgage interest rates still below 6 percent, homeownership has never been more affordable.

"The financial climate right now enables first time home buyers to get out of a hole, to get into a house," said Dawn Rish, a real estate agent with Coldwell Banker West Shell in Wyoming.

First, make a list of what you are looking for in a house, differentiating what you want vs. what you need, Rish said. Then take the list to a real estate agent recommended to you by family or friends. (Most real estate agents are paid by the seller - so retaining one as a buyer usually is free.)

If you're following this calendar, you should be on your way to completing the next two steps to homeownership: building savings and repairing credit.

Be patient, however, warns Wendy Daniels, who bought her first home in September. She spent two years saving up, paying off credit cards and looking around before she bought her house in Carthage.

"Start looking for a house way ahead of time," Daniels said.

Rish also recommends making a simple cost-free, commitment-free phone call to a mortgage lender who can tell you how much home you can afford based on your income and credit history. The lender can also tell you specifically what credit blemishes may need to get cleared up before you would qualify for a mortgage.

"The biggest heartbreak is to get these kids in a car, and they find the house of their dreams, and they can't have it," she said.

JULY

Student loans

College graduation is behind you - and now you face repaying those student loans. You might get a benefit this month, however, if interest rates on student loans are again lowered.

Interest rates on federal Stafford loans - the most common type of financial aid - were reset July 2003, to a historic low of 3.42 percent. If certain benchmark yields stay at their current levels, rates are likely to again fall in July 2004.

And that could mean more savings for students and former students.

Most students won't have to do anything to take advantage of these savings. Their monthly payments will simply fall.

But if you have multiple outstanding loans - or even just a hefty sum - consider this month consolidating them into a single loan. Sallie Mae, for example, offers student borrowers who consolidate additional rate discounts up to 1.25 percentage points.

Also look into other programs, like automated payment plans that could lower your rate even further. Contact your student loan provider for more details.

AUGUST

And speaking of education

As you send the kids back to school this month, also think about their future education and consider opening a college savings plan. There are more options than ever for what could be the second-highest expense of your life (next to a home).

• State-sponsored 529 plans are the best options for moderate income earners who have small children. States run the program, as authorized by Section 529 of the federal Internal Revenue Code.

Details such as contribution limits, investment options and expenses vary state to state - but withdrawals used for qualified higher education expenses are almost always free from federal and state income tax.

Most programs are open to out-of-state residents, but generally only in-state residents get the state tax advantages.

More information on Ohio's CollegeAdvantage Savings Program is available at www.collegeadvantage.com. Look for information about Kentucky's Education Savings Plan Trust at www.kentuckytrust.org. Details about Indiana's plan, called CollegeChoice, are available at www.collegechoiceplan.com.

• Coverdell Education Savings Accounts might be beneficial for people looking for more flexibility and investment options than 529 plans provide.

Money in a Coverdell account can be used for primary and secondary school costs, as well as buying a computer, textbooks and school uniforms. Investment options also are much broader, making them more attractive to more aggressive investors.

• Perhaps the broadest way to save for college expenses is through old-fashioned accounts in the child's name. These accounts typically are set up through Uniform Transfers to Minors Act (UTMA). Some older accounts still may operate under Uniform Gift to Minors Act (UGMA), which UTMA replaced.

These plans are easy to establish and typically take advantage of the child's lower tax rate. But lower tax rates don't matter given the tax advantages of the other plans, and custodial accounts can reduce financial aid eligibility. Worse yet, at adulthood the assets become the legal property of the child.

• Financial aid and student loans are the best options for families whose kids are heading to college within a few years. Fees and the potential for short-term market losses make the college savings plans not make sense for soon-to-be college students.

SEPTEMBER

Asset allocation

Now that you have your money going into the right accounts, use this month to make sure those accounts hold the right investments. How much you have invested in stocks vs. bonds vs. cash is called asset allocation.

Your balance between those investment classes depends mostly on how soon you need to spend what you are saving. Consider it a spectrum: the closer you are to retiring or paying for college, the more cash and fewer stocks you should hold.

The more time you have until retirement or tuition-paying days, the more you should have invested in Wall Street. Short-term ups and downs even out over the longer periods.

Asset allocation can be highly individualized, also dependent on your own preferences and risk tolerances. An easy way to get expert recommendations is to complete the questionnaires at Web pages such as money.cnn.com, www.forbes.com and www.fidelity.com.

OCTOBER

Spending accounts

You could be missing valuable, money-saving opportunities just because you don't know they're available. Take the time this month to check into what company benefits your employer offers.

One such missed opportunity could be flexible spending accounts, which allow you to put aside pre-tax dollars for medical or childcare expenses. Because you don't pay tax on this money, you automatically save 10 percent to 35 percent, depending on your tax bracket.

"When you're talking about any type of medical or dental coverage, most people have to pay something," said Alice Lavery, vice president of Target Solutions, a Mason-based human resources consulting firm. "Out-of-pocket expenses keep going up, as well."

Lavery said companies typically operate their plans according to the calendar year, allowing you start making the pre-tax contributions in January. But you might have to fill out the paper work during an "enrollment period," which could come in the final months of the year.

If you already have a flexible spending account, use this month to make whatever appointments you need to make sure you drain the account by the end of the year. Flexible spending accounts have a use-it-or-lose-it feature - you lose whatever money remains in the account at the end of the plan year.

NOVEMBER

Insurance

It's the month for Thanksgiving - so give thanks for what you have by finding ways to protect it. That means insurance. Use this month to examine what kind of insurance you already have and investigate whether you need more or less.

"Do you want to leave your survivors without debts, or do you want to replace your income?" Terrace Park financial planner Jack Gambetta said.

How much life insurance coverage you need, and for how long, all depends on your individual needs and goals. Before buying an individual policy, check with your company to see what is provided or offered under your benefits plan. Also shop around for the best rates.

And don't forget to consider disability insurance, which pays a benefit if you become unable to work. Gambetta recommends a policy that replaces 60 percent to 70 percent of your pre-tax income.

"Quite honestly, I think disability insurance is more important than life insurance," he said. "Disability is a more important consideration."

DECEMBER

Estate planning

What better time than the end of the year to plan for the end of your life? And since it's the season of giving, consider making tax-free gifts if you need to reduce your assets to below the taxable thresholds.

If you don't have a will, make one - even if you think you don't have enough assets to warrant it. Having a will allows your heirs to avoid complicated and expensive legal processes.

Having a will also ensures that what you do have goes to the right places, including any special charities or organizations you want to bequeath to.

If you do have a will, take this month to re-examine and consider updating it. You can pass on to your heirs $1.5 million in 2004 and 2005 before owing federal estate tax. Also in 2004, you can make gifts of $11,000 per person without any gift tax consequences.

"Also make sure the titles to your property are in sync with your estate plan," said Tom Cooney, CPA and partner at Cooney, Faulkner & Stevens.

You've worked hard to get your finances in order, but you can't take it with you - so make sure it goes to the people or charities you want it to.