Your Annual Money Review: The Best and Worst of 2011
January 09, 2012What incredibly good money decisions did you make last year? In their book Switch, Dan and Chip Heath suggest for organizations that want to change to look for the “bright spots” in the organization and study them. In a sales organization, if you have someone who triples their sales or in the audit department, you notice someone catching errors that save the company tons of money, study them. Find out what they are doing that is different. Take the concept and apply it to your own finances.
If we don’t study and then celebrate our own successes, we may tend to minimize them and then not repeat them. What were your bright spots in 2011? For me, I moved – that was a big thing. My husband and I moved to our condo in Utah and rented out our house in California (since we can’t sell it right now). This was a good money move for us even though the move itself was costly, and we had to make a few purchases when we arrived at the condo – a new stove and microwave as well as a couple of coats of paints on the weird putty colored cabinets (which are now a beautiful chocolate brown). It’s less expensive to live here and we’ll be able to pay off the condo in 10 years so we can retire here.
We moved to a state that still has a state income tax, but it is lower than California. Other things are cheaper –property taxes and vehicle registration. Sadly there is no “Bev-mo” here to stock up on our favorite California wines on the 5 cent specials, but everything ELSE is cheaper. We moved to a smaller place and our utilities are less expensive. Moving was a big bright spot for us in 2011.
What were your bright spots for 2011? Did you pay off debts that had been accumulating for years? Did you live below your means last year? Did you beef up your emergency fund? Did you stick with your investment strategy even with the volatile stock market that gave us 37 200+ point swings in 2011? Did you increase your retirement investment contribution percentage in 2011? Did you start a Roth IRA or 401(k)? List your biggest financial bright spots for 2011. Then consider how to build on them in 2012.
If you don’t already do this, consider doing an annual net worth statement. A good time to do it is after your year-end statements come in. Add a statement page of your financial bright spots for 2011 so you can come back and review them year after year – see the fruits of your labor and your good decisions.
Here are some tools for putting together a net worth statement:
What was the worst of 2011? Mistakes you want to avoid in 2012.
This is often the easiest part for most people since it is human nature (it seems) to dwell on our mistakes and foibles. This one was top of mind for me. My biggest stupid money mistake in 2011 was running a red light and getting a $400 ticket. This is a doubly stupid mistake because of the actual danger involved. The back story is I had just driven seven hours and was close to home – within a mile from my house. Don’t they say most accidents occur within a mile of your home? I think the reason why is, you tend to let your guard down in familiar territory. I had gotten some terrible news about my Mother-in-law’s health. I was shaken up and I couldn’t get an image out of my head. It was like my body was in the car but I was somewhere else. When the guy in the car next to me turned right on red light (which is legal for him), I just thought my lane was good to go and I went right into traffic coming from the right. Luckily, I didn’t harm anyone else and no one hit me. Unluckily, there was a cop four cars behind me who pulled me over and gave me a ticket.
A traffic ticket is EXPENSIVE! I have only had three my whole life including this one and was not thrilled to pay over $400 to the City of Sacramento. When I think about what else I could have done with that money, I am sick to my stomach. Now when I am driving anywhere, I focus and pay attention to the speed limit. If I get some terrible news and am distracted, I am going to pull over and pull myself together and not simply try to press on like I am some kind of a robot. Lesson learned – distracted or not, pay attention when driving and if I can’t, get off the road.
Think about what you can do to make the biggest impact on your finances and to get you closer to meeting your financial goals in 2012. Then make it happen. Build on those bright spots. In terms of the mistakes, I have to just be thankful that mine wasn’t worse and forgive myself for being stupid and MOVE ON! That was yesterday and tomorrow is a new day. Hopefully it will be a brighter one.