A Financial Checkup for the New Year

We've just reviewed your spending, retirement, insurance, and debt. Now let's move on to the second part of our financial checkup and look at debt, banking, and investing.

Investigate your debt
Not all debt is bad. The good kind can be in the form of a mortgage or a school loan. However, some debt can infect your finances and debilitate your net worth. This kind is usually in the form of plastic.
  • As explained in the Fool's Getting Out of Debt opus, the average credit card has a balance of $5,800, with an interest rate of 18.3%. That results in annual payments of $929.70, after tax. In other words, someone in the 28% tax bracket would have to earn $1,291.25 just to pay the interest on that debt. If this scenario bears any resemblance to your life, make eliminating debt your top financial priority.

  • There's another important aspect of debt: your credit history. Your ability to manage debt will affect the terms on which you borrow money in the future, for a home, a car, a small business, or your kid's education. It all comes down to your credit report, and all Fools should check theirs out. You might owe money you forgot about, or someone might think you owe money that you really don't. Get your report through any of "The Big Three" agencies: Experian, Equifax, and Trans Union. Or, you could order a report from all three in one easy step at
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Evaluate your bank
Your financial life depends on money pumping in and out, in and out -- being efficiently delivered to all the right places. That, of course, is regulated by your cash flow organ: your bank account.
  • Add up your ATM charges to see how much that convenience has cost you over the past year. Then start using your checks and/or debit cards more often so you can line your pockets instead of the bank's.

  • If you're able to navigate the Web, consider turning to Internet banking. You can earn interest on your checking account, download transactions into Quicken or Microsoft Money, and save yourself some hassle. It also makes tracking your expenses and monitoring your budget infinitely easier.
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Explore your investments
Your portfolio is the reproductive system of your financial body. Is yours optimally positioned to multiply?
  • Do you know how your stock portfolio is doing compared to the overall market? If not, perhaps it's time to measure your performance. The Fool's My Portfolio (which is free to all registered Fools) allows you to measure your investments against the benchmark of your choice. Plus, since it's Web-based (and not confined to your desktop), you can pull it up wherever you have Internet access.

  • If you haven't been able to beat the market, perhaps your skills could be sharpened by meeting 10 investing masters. Then, curl up in bed with the top investing books of all time.

  • Is your discount broker underperforming? Compare features and fees at the Fool's Discount Brokerage Center. You'll also learn more about how to invest small amounts of money, how online security works, and the differences between cash accounts and margin accounts.
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As we conclude this checkup, we have two more things for you. No, not lollipops. A printable checklist to accompany this checkup and a list of discussion boards full of Fools confronting real-life, health-related issues. After all, you are your greatest investment.

Next: Printable Checklist »

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