by Kate Maier—Central Planning, Wealth Enhancement Group

When you were growing up, were you one of those unfortunate children whose parents periodically reminded you that "money doesn't grow on trees", "close the door so we don't heat the neighborhood" or "when I was your age we didn't have money for such luxuries as shoes!" As annoying as those statements were to you then, your parents were telling the truth (well, maybe not the one about the shoes).

Now that you find yourself making those same statements to your children, do you ever stop to wonder if you're following them yourself? Every now and then, it's a good idea to sit down, go through your finances and make sure that the advice your parents gave you way back when was absorbed even if you rolled your eyes at it. First, keep an eye on your credit report. According to Federal law, individuals are entitled to one free credit report from each of the three credit agencies every year. That means that if you play your cards right you can review your credit report for free 3 times a year. However, don't fall for those "Free Credit Report" commercials you see on television. While you may be able to receive one free report from these places, there's always a catch, and it's never free! Instead, contact the credit agencies directly through www.annualcreditreport.com or (877) 322-8228.

Once you've checked out your credit report, check out your credit. Are you spending beyond your means? As you may have been told: "just because you have the credit doesn't mean you should use it!" Are your credit balances increasing every month or are you having problems making the payments? Are you only making minimum payments each month or are your credit card payments becoming an increasing part of your monthly cash flow? If so, take the time to work out a budget so that you start spending less than you take in each month and applying any extra income to paying down your credit cards. Focus on the highest interest-rate cards first and work your way down. If paying off the low balance, low-interest card first helps give you that sense of accomplishment to help you start working towards paying down other debt, however, by all means start out that way. But no matter how you approach it, work on paying down that debt. As funny as it may seem, the less debt you have the more access to credit you'll receive.
While working on your cash flow and debt, remember to still pay yourself. Even if you're working on paying down some debt don't forget that you still need to be saving for retirement. Even if you can only put $25 a month away, do it. As your income increases, increase the amount you save by the same amount. Some people find that putting their monthly savings on an automatic transfer helps them to "stay honest" so that they aren't tempted to take that money to buy the newest gadget. Remember, that new gadget today will not help you pay your bills in retirement!

So even if your parents were cheesy and even overbearing in their financial advice, remember that the clichés they may have used were clichés for a reason: they have some truth to them! So take a moment to reflect on what they were trying to tell you, and if you follow it they won't lead you wrong. Unless they tell you the best way to save money is to keep wearing those suits you bought in the 70s. In that case, maybe spending a little money is a good thing…