FOOL'S EYE VIEW
Putting My Money Where My Mouth Is!

By Cliff D'Arcy
January 3, 2006

Recently, I checked the articles which I've written over the past twelve months to see if I'd lived up to my boasts. Given that I've written roughly a quarter of a million words for the Fool in 2005 alone, this search was no mean feat!

After all, it's said that the road to Hell is paved with good intentions, so simply intending to become richer without actually doing anything about it is no use at all. Anyway, here's a summary of what I said I would do, and whether I achieved my personal financial goals:

Borrowing

1. I said that I would shun personal loans and overdrafts, and I did just that. Having had huge problems in the past, I've vowed "never to do debt again". Happily, I stayed out of the red and in the black for the third year in a row. Yippee!

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2. I promised to avoid paying interest. Happily, as I pay off my credit card in full each month by Direct Debit, I didn't pay a penny of interest in 2005. In fact, I'm earning about a tenner a month by spending on a Best Buy cashback credit card.

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3. I swore that I would pay off my mortgage - and I did, but not in the way that I'd expected. In fact, I was so worried about Britain's massive debt burden and the threat of falling house prices that I sold my home and now rent a property while I see what unfolds. If you'd like to cut your housing costs, read Ten Ways To Be A Smarter Homeowner.

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Budgeting and bills

4. I vowed to shop around for insurance and buy more protection, including life insurance, income protection (long-term sickness cover) and critical illness insurance. Alas, if anything, this has gone in the other direction because, since leaving the Fool to become a freelance writer, I've lost the "death in service" cover that TMF gives its staff. As my own boss, I must protect myself, because I can't rely on anyone else to do this for me. Still, I'll be sure to use these five fab tips to save me a fortune when I do buy this much-needed protection.

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5. I promised to be better with paperwork, but I've failed miserably in this respect. I do scan my bank and credit-card statements for any bogus transactions, but I don't check my receipts or file important documents; instead, I have an ever-expanding paper mountain. Still, that's one good habit for me to adopt in 2006.

In addition, I declared that I would shred financial documents to make sure that they didn't end up in the wrong hands. This was going swimmingly until my shredder died a few months ago. I promise to take it back to the shop for a replacement in January, honest! Also, I bought a small notebook to use as a spending diary, but I haven't got around to using it yet. Bad boy!

6. I agreed that I would become better at budgeting and spending, and, by and large, this happened. I did a one-month financial detox in January and, thanks to extreme budgeting, I spent under £40 on top of my regular bills that month. I plan to do the same this January, with the goal of setting an even lower record. Among my other savings were: finding cheaper broadband, joining my local library (I buy piles of books each year) and saving a fortune on telephone calls. Job done!

Saving, investing and pensions

7. I pledged to save more by opening a regular-savings account. I failed to keep this vow, but for a good reason: I now have more than enough cash in my emergency fund to tide me over for months - even years - if misfortune strikes. Also, as a higher-rate taxpayer, it's all but impossible for my savings to earn more than, say, 3% a year, which barely keeps pace with inflation (rising prices). Also, I can't save using tax-free cash mini-ISAs because I open a shares maxi-ISA each year. As 3% a year doesn't grab me at all, I prefer to invest my spare cash in shares. As I've taken to saying, "Cash is trash, but the stock market's flash"!

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8. When it came to investing and pensions, I made a whole heap of promises. I claimed that my wife and I would each put the maximum £7,000 per tax year into shares maxi-ISAs, which we did in the 2004/05 and 2005/06 tax years.

9. Additionally, I said that I would put more into my pension, and I performed brilliantly here. In fact, by the time that I left the Fool, I was paying in the maximum 20% of my wage (the limit for people in the 36-45 age band). One thing that helped was to put my pay rise into my pension; this boosted my contributions nicely.

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10. Finally, I vowed never again to leave my self-assessment tax return until the last minute. In previous years, I've even left this until 30 September, which is the last day that you can submit your form and still have HM Revenue & Customs calculate your tax for you. Happily, my tax return was very simple this year, so I managed to do it by mid-August, which is about six weeks earlier than usual.

So, I'm going to give myself, ooh, let's say seven or eight out of ten for my meeting my financial resolutions in 2005. However, in the words of teachers everywhere, "He could do better," and I hope to do just that in 2006.

Good luck with your financial resolutions: here's to getting rich in 2006!

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