Spring has sprung and the forecast for financial stability reveals that the economic barometer shows a rise in the cost of living, especially for retirement and health care. This means it is time to put the chilly economic climate behind us, clean out the consumer spending cobwebs, dust off the debt and spring clean America’s finances.

With recent reports that half of all American families are carrying more than $25,000 in debt and the total amount of consumer debt in the United States is at nearly $2.46 trillion dollars, most people want to sweep their money troubles under the rug – a financial spring clean is just what this country needs.

1) Pay down your credit card debt: First, make a budget. “Where does all the money go?” By setting a budget you can stop frivolous expenses and redirect the money you save to pay down debt. Next, get another job. I know, this doesn’t sound like fun. But having more money will aid you to reduce debt more quickly. Third, sell stuff. The Internet has proven that everything is worth something. Go to eBay, Craigslist or Kijiji – you’ll be amazed at the market (and the asking prices) for this and that. Don’t be surprised if you have a few hundred dollars – or more – sitting around your house or in your garage. Finally, keep the real goal in mind. Building wealth, not reducing debt, should be your ultimate objective.

2) Build an emergency fund: Consider adding some money to your own slush fund. Given the uncertainty of the economy and jobs nowadays, you should always try to maintain a minimum of three to six months worth of living expenses in a savings account, money market account or CD in case of an emergency.

3) Fund an IRA: If you have some years before you retire, consider starting or investing money in a Roth IRA. Any earnings grow tax deferred inside the Roth IRA and distributions are tax-free when you take money out. Check with your tax preparer for distribution rules and regulations please.

4) Set S.M.A.R.T Goals: Are your financial and retirement goals well-defined? In developing your financial goals, make sure they’re S.M.A.R.T. …

  • Specific
  • Measurable
  • Attainable
  • Relevant
  • Timely

For example, say you want to save $10,000 by Dec. 31, 2010 for your wedding. To do this you must set aside $1,000 per month or $500 from every paycheck. To accomplish this you will reduce the number of times you go out dinner each week and will trade-in your SUV for a smaller, more fuel efficient model by April 30, 2010.

If you haven’t already taken some time to clearly define your financial goals, don’t put it off any longer. Well-defined goals are imperative for creating an effective financial plan.

5) Retirement strategies for your 50s and 60s: First, if you haven’t maxed out your 401(k)/403(b) contributions at work and your age 50 or over, you are eligible to take advantage of what is known as the catch-up provision. In essence, if you haven’t saved as much as legally possible every year you’ve been working, you are able to contribute an extra $5,500 per year (over and above the legal limit – $16,500) into your retirement plan in 2010. Next, if you have a spouse, family and assets to protect, you should investigate long-term care insurance. Long-term care protects you and your family from the emotional, physical and financial pain that a health issue can have on them. Third, start paying down your non-deductible debt such as credit cards and auto loans. Try to be debt free, perhaps with your mortgage being the only exception, by the time you retire. Next, review your investments and asset allocation. Make sure you’re NOT too heavily invested in equities (no more than 50 percent to 60 percent) or your own company stock (no more than 10 percent). Finally, consider accumulating up to three years worth of income in savings, CDs, money markets, or treasury bills. This is where you should start taking money from when you retire.

6) Reward yourself: When was the last time you took a vacation or did something nice for yourself? If you have to think abut it, it’s been too long. Book a trip or weekend getaway. Get a massage or spa treatment. You deserve it!

7) Avoid the biggest money mistake: Which is NOT getting in the habit of saving money at an early age. In fact, when talking with people in their 50s and 60s, if there is one financial regret and thing they could change, it is that they wished they had saved more money and started saving earlier. Another big mistake is people retiring from work when what they really want is a break.

Bill Losey, CFP(R), CSA, America’s Retirement Strategist(R), is a highly sought-after advisor, retirement authority, thought-leader, author and TV personality because he makes the complicated and mundane topics of investing and retirement fun! Bill has over 20 years experience in the financial services industry and is a Certified Financial Planner practitioner, a Certified Senior Advisor and Certified Retirement Coach. He is the author of “Retire in a Weekend! The Baby Boomer’s Guide to Making Work Optional” (a finalist at The Indie Excellence Book Awards), founder of National Retirement Planning Month, and he publishes Retirement Intelligence(R), an award-winning weekly newsletter that reaches thousands of subscribers worldwide. For a complete bio and media demo, please visit, www.myretirementsuccess.com.

“Retire in a Weekend!” can be purchased from www.retireinaweekend.com and www.amazon.com. Visit www.BillLosey.com for more information.