The financial hangover cure

Resolutions are passé. It's 2008 and it's time to set some real goals

By Anwar Ali

New Year's resolutions rank high on the list of man's most hackneyed, well-intentioned ideas. Everything from boot camp fitness trainers to penny-pinching budget revisions are abandoned faster than you can say "Hand me that scalpel."

But all that can change in 2008, doctor. Yes, most resolutions are made to be forgotten. So instead, let's call your perennial makeover list something else: goals.

And instead of cramming that list into your desk drawer of nebulous things, pin it to a place where you can see it. It doesn't matter if you write it with a 15-cent ballpoint pen or a Mont Blanc.

So, that's your first post-party tip. And here are a few more to get 2008's financial ball rolling.

1 Get real
Vowing to make more of an effort to pay off debts in 2008 is too vague. But vowing to pay off 75% of your credit card balance is a concrete target you can work toward. That will make it harder for you to let yourself off the hook.

2 Look back to look ahead
"It's always a good time to review last year," says Tom Zaks, investment advisor at RBC Dominion Securities. Why not now? This includes a comprehensive examination of all your spending habits, expenses and debts.

3 Go, team, go!
Even if you are more savvy than the average doc when it comes to finances, enlisting the help of an accountant, lawyer and financial planner is essential. They'll give you ideas that you may not have considered before. "Not knowing what strategies are available is probably one of the bigger pitfalls that somebody encounters from a financial situation," says Mr Zaks.

4 Teach yourself new tricks
The only thing worse than having no team is having one you rely too heavily upon. If you already have a team in place that handles your money, challenge them from time to time to make sure they're not asleep at the wheel. To do that you need to know a little about finances yourself.

"You have to work towards being your own investment manager over time," says John Stephenson, senior vice-president and portfolio manager at First Asset Investment Management. Make it a point this year to learn one new thing about personal finance that you didn't know before, whether it's about taxes or the stock market. Pick up a book or magazine.

5 Get it together
Make things easier for you and your advisors by organizing all financial materials - wills, income statements, receipts, legal documents - into a binder so they can be cross-referenced.

6 Tip off
Do talk to people about money matters, but don't take their investment tips at face value. "Don't invest on the basis of tips," says Mr Stephenson bluntly. "It's detrimental to your financial health."

7 Plug your financial drains
We all get impulses to splurge on luxury that we can really do without. While it might be hard to give up your indulgence for designer clothes, five-star weekend retreats, spa packages and vintage wines all at once, you can start with one. Budget how many bottles you'll add to your cellar, for example, before you start your buying binge. When that's under control, move on to something else.

8 Purge one debt
While you're at it, pay off one debt entirely. Making your car loan disappear will feel like an accomplishment and help you feel less swamped.

9 Consider consolidation
And speaking of debt, interest payments are stress-inducing. Mr Zaks suggests you ask yourself: "If I do have debt, should I look at consolidating those debts on a lower interest line of credit?"

10 Set a date to incorporate
Incorporation is not a subject all doctors understand. "But if they're able to learn about it and see if it's applicable to them, there are a lot of tax savings that can be had," says Mr Zaks, whose book The Business Owner's Guide To Wealth Management includes a chapter on this topic.

In certain situations, incorporating your practice can save you tax dollars. For example, $400,000 in revenue that's taxed at a corporate rate of 18% is much lower than taking that money out of the business to be taxed in the 46% personal tax bracket. It could make a nice retirement fund that's built through the corporation, Mr Zaks says. "[Doctors] have to look at it not just from a tax-savings vehicle now but as a retirement tool later on."