While you are planning your new Year’s resolutions, focus ongetting yourself financially healthy for the new year aswell.

Holiday Spending

Have you already finished your holiday shopping? if so, you’redefinitely a good planner. if not, then develop a realistic holidayshopping budget this year, and stick to it. if you find yourself incredit card debt, come up with a plan to pay it off and not supportthe credit card companies with a lot of high finance-chargepayments. you can find a great calculator on my website(davidcolley.wrfa.com) to help you figure out how long it willtake to pay off your credit card debt. with the recent changes thecredit card companies have made to increase their interest rates,it’s important not to let this get out of hand.

And have you ever heard of a Christmas club account? it may soundold-fashioned, but this is an account you set up and fund monthly,so that by the time you get to December you’ve saved enough to payfor Christmas presents. if you put in $50 a month (that’s theequivalent of a $1.75 cup of coffee a day), you wind up with $600to spend on the holidays. These days, saving rather than spendingis in vogue, so set up an account for 2010 and have some money inthe bank next December instead of using credit cards to pay forholiday shopping.

Capital Gains

If you are lucky enough to have some investments, you will be happyto see that the stock market has made quite a recovery overallsince its low mark in March. As the year’s end approaches, it’simportant to review your portfolio to see if there’s anyrebalancing necessary to get set for 2010. if you have a taxableinvestment account, remember to take any capital gains intoconsideration. if you do have capital gains, you may want toconsider offsetting them by selling some securities with valuescurrently below your basis in them.

Remember, never act on selling a security just for tax reasons, butdo take these tax considerations into account when making yourdecision. and of course, consult a tax professional prior to makingany financially related investment decisions.

Retirement Planning

If you are covered by a retirement plan at work, make sure youconsider whether you have made all the contributions you want to byyear’s end. some types of retirement plans—such as traditional andRoth IRAs—allow you to make your 2009 contribution until April 15,2010. But other types require that everything be done by Dec. 31.so understand your options and contribute accordingly.

Income and Expenses

Has your income changed this year, either up or down? Make sure youhave had sufficient taxes withheld from your income or paid enoughin estimated taxes. you don’t want to be surprised come April. Andif you are self-employed, consider whether it makes sense to pushany additional deductible expenses into this year, such as businesssubscriptions, dues payments, or any work-related purchases. Asalways, a little planning can go a long way in making yourfinancial life run more smoothly. Best wishes for a good2010!

The opinions expressed are those of David Colley and are meantto be general in nature and should not be construed as investmentor financial advice related to your personal situation. Pleaseconsult your financial adviser prior to making financial decisions.Colley is a financial adviser with Waddell & Reed, member SIPC,and can be reached at (310) 371-7036.

December Decisions