What Personal Finance Tasks to Do ASAP at the Beginning of the Year

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At the beginning of each year, we like to remind readers of several important financial housekeeping tasks — plus new tax rules, and current forecasts for rates and more. Even if your New Year’s resolutions have nothing to do with personal finance, these are key things to consider in January and beyond.

Here are a few special notes for 2024 to help you plan:

1. Student loan forgiveness: In 2023, President Biden’s plan for student loan forgiveness was ruled too far-reaching by the Supreme Court. While the original plan would have affected 90% of federal student loan borrowers, CNBC reported on Jan. 2 that the new forgiveness plan will only reach a small percentage of them, between 4 million and 10 million. If all goes well, relief would likely to go into affect on July 1, 2025, but the administration may be able to move things more quickly.

For those who need them, CNN rounded up the best private student loans for 2024, based on interest rates, repayment terms, and more, with a top pick of Discover Bank. In 2023, CBS News reviewed the pros and cons of private loans.

2. Mortgage rates: Expect mortgage rates to decrease in 2024 — but not right away. As NerdWallet noted on Jan. 2, the general expectation is that the Fed will cut short-term interest rates in the spring, after several months of (predicted) considerably slowed inflation. At the end of 2023, Money.com reported that experts expect rates to be 6.8% on average for 2024 and 6.5% by the end of the year.

3. The housing market: Money.com also shared that “Realtor.com expects the typical monthly purchase cost for the median priced home listing to drop slightly from this year’s $2,240 to $2,200, amounting to about 35% of the average U.S. household income. Demand will probably remain low, and inventory will still be limited as would-be sellers hold back.” (Meanwhile, rental prices probably won’t change much.)

4. CD rates: On Jan. 2, Bankrate forecast that 2024 will be a good one for CD investors. Even if the Fed cuts the key benchmark rate (expected to be 4.6% by the end of 2024, as PBS NewsHour reported at the end of last year), high yields are likely. That said, the NYT [gift link] said on Dec. 29 that these may be the best CD rates we’ll see for a while… so there’s that.

5. Series I savings bonds: The current rate is 5.27%, including a fixed rate of 1.30%, for I bonds issued November 1, 2023, to April 30, 2024. In case you’re not familiar, these bonds earn interest monthly, and interest is compounded semiannually; you’ll earn both a fixed rate of interest and a rate that changes with inflation.

You can redeem your I bond after 12 months (or keep it in there as it earns interest for up to 30 years). If you cash in the bond in less than 5 years, however, you lose the last 3 months of interest.

6. Miscellaneous: This CNBC story includes details on new rules that cover workplace emergency accounts called pension-linked emergency savings accounts (PLESAs), emergency withdrawals from 401(k)s without a 10% tax penalty (with a special rule for victims of domestic abuse), and more.

Personal Finance Tasks to Do ASAP in a New Year

1. Review 401(k) Limits: The 2024 limit on 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan, is $23,000 — up from $22,500 in 2023. For people aged 50 and over, the catch-up contribution limit stays at $7,500.

If you’re making regular contributions from your paycheck, make sure you’ve adjusted your chosen amount accordingly if you want to max out your 401(k). It’s best to do this at the beginning of the year so you only have to do it once — if you do it in the middle of the year, you’re either not maxing it out or you’ll have to change your contribution again next January.

{related: where to save (when you don’t know what you’re saving for)}

2. Review IRA Limits: The IRS limit on annual contributions to an IRA increased to $7,000 from $6,500. For people aged 50 and over, the catch-up contribution limit of $1,000 from 2023 will remain the same this year.

{related: not sure what to do first/next in your personal finance journey? here’s our money roadmap}

3. Reassess your debt: If your mortgage or (private) student loan payments changed recently, figure out how you can round the required amount UP to an even number, and make the change accordingly (paying the extra toward principal). Do what you can — every little bit helps with principal (this calculator from Bankrate helps you see how much), and knowing that a memorable round number is coming out of your bank account helps you to know if your balance is sufficient.

{related: how to decide when to pay down debt — and when to save}

For example, if your mortgage payment is now $3,218, you could pay

  • an extra $282 toward principal each month (total = $3,500 each month)
  • an extra $82 toward principal each month (total = $3,300 each month)
  • an extra $782 toward principal each month (total = $4,000 each month)
  • or an extra $32 toward principal each month (total = $3,250 each month)

4. If you have a 529 plan, reassess your automatic contributions. Each state occasionally changes the amount you can give to get a state income tax deduction; if you want to max it out, then assess.

A new perk for families: You can now roll unused 529 funds into a Roth IRA for your child without tax penalty. CNN has all the fine print; for example, 529 plan contributions and earnings from the last five years can’t be transferred to a Roth.

{related: the 411 on using 529s to go back to school}

5. Reassess your subscriptions and other repeating payments to make sure you’re not paying money for services you’re not using — and review any new prices. The New York Times [gift link] recently listed what you’ll pay for the major streaming services in 2024, including the price hikes from Amazon Prime Video and Netflix. *grumble*

6. Automate what you can: Consider setting up automatic investing, or automatic saving to amortize big expenses. Kat has a small amount of money automatically moved from checking to her online savings accounts to help her save for multiple financial goals, like her emergency fund, vacation fund and predictable large bills (term insurance, accounting advice, etc.).

What personal finance tasks would YOU do ASAP in a new year, readers? What have you done already this year; what has this list inspired you to do?

{related: what was the best financial decision you made last year? (2018 discussion)}

Stock photo via 123rf.com/serezniy.