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Anticipating financial makeover in 2008? Lay groundwork now

If an extreme financial makeover is to be part of your new year’s resolutions, experts say now’s the time to start making plans.

“As we near the end of the year, many people feel the urge to make a New Year’s resolution to get a better handle on their finances,” said Stan P. Purvis of Trustmark Wealth Management in Jackson. “An extreme financial makeover may be the best resolution to improve your financial health. This would be applicable to all levels of income earners.”

His best advice to someone in need of a new financial beginning has the following points:

*Explore opportunities to increase your income/earnings; never underestimate your earning potential.

*Spend less than you earn.

*Pay off credit card bills — start with the smallest balance for early success.

*Establish an emergency fund.

*Save for retirement goals.

Setting benchmarks

Randy Mascagni, a Jackson certified financial planner, said the first step is to create a balance statement that lists your assets, liabilities and net worth, then a cash flow sheet that details your monthly income and expenses.

“This will be a good benchmark to compare as you review your situation each year for progress made,” he said. “Next, consider hiring a financial professional to advise you as well as keep you committed to reaching your financial goals.”

He likens the use of a financial professional to needing a coach from time to time in other areas of life. “It’s like working out with a personal trainer, most of us falter without a coach,” he said. “Having someone to keep you accountable financially could improve your situation greatly over time.”

About those credit cards…

Germaine Weldon of AVLWealthCare in Gulfport said forget about the credit cards, beginning this holiday season, as part of the extreme makeover.

“Without trying to be the grinch who stole Christmas, the reality is that Americans need to call a halt to spending money they don’t have, even if it is the Christmas season,” she said. “More than 20% of Americans are just one disaster away from bankruptcy. This is not the kind of gift you want to see under the Christmas tree.”

She added the following pointers:

* Responsible use of credit and starting a disciplined approach to saving are Christmas gifts that you can give to yourself and your family.

* Find a way to celebrate the holidays besides spending money.

Purvis said a financial makeover should begin by addressing some immediate opportunities as well as developing a long-term comprehensive plan to achieve financial independence. He encourages taking full advantage of year-end opportunities and tax planning strategies.

Some of those strategies include:

* Enroll in your company’s benefit plans — health insurance, healthcare reimbursement, life insurance and disability insurance.

* Contribute to your 401(k) plan to maximize the company match, the maximum limit and the over age 50 catch-up limits.

* Review your tax situation with a CPA by estimating your income and determining if you should prepare or postpone certain deductible expenses.

* Review your investment portfolio for winners and losers.

“Second, I would encourage someone to meet with an independent fee-only certified financial planner professional to begin the process of developing a comprehensive financial plan,“ Purvis said.

Contact MBJ contributing writer Lynn Lofton at llofton656@aol.com.

About Lynn Lofton

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