A very Happy New Year to everyone.
So what does one need to do once the new year's eve alcohol and festivities wear down? From a financial perspective, there are a few things you should look at right away ...
1. TFSA: If you have a Tax Free Savings Account, a whole new $5000 in contribution room becomes available as of January 1st. So if you have to dough ... make sure you put the money in the account and let it grow ... tax-free as soon as possible. Even if you do not have money saved up, you can start smaller regular contributions from your paychecks. Pay the TFSA before anything else and you won't miss the money. :)
2. RRSP: Hopefully you have already made your RRSP contributions for the 2011 tax year. If not, the countdown to the deadline starts now. Make sure you do that before Feb 29th to get you tax savings in time for your 2011 return. You could be even more proactive and start contributions for the 2012 Tax year. Of course this means that you need to guess a bit on your RRSP contribution room for the year. But if your income has stayed much the same or grown in the past year, your RRSP room should be at least what it was for 2011. Its never a bad idea to start something safe now and then when you get your Notice Of Assessment, you can always top it up.
3. Mortgage lump sum prepayment: If you have a Mortgage and plan to make a lump sum payment to the mortgage without penalty, Jan 1st gives you a fresh opportunity to do that. Most lenders allow annual lump sum prepayments with no penalty. If you have funds lying around, doing nothing, get them working for you by saving you mortgage interest.
4. Credit card debt: Before you do any of the above, make sure you pay off your credit card debt that you may have accumulated thanks to Christmas and Boxing day shopping. The 19 or 29% interest you pay on your balances will be far greater than any benefit gained from any of the above.
In addition to the above, the new year is a great time to reassess your financial situation, review your plans, and course correct if needed.
Have a Happy New Year!!!