Is there a nagging little voice reminding you of some important task you've been postponing? With a little practice, it's easy to shut that voice out. But did you ever notice that — eventually — those little undone things come back to haunt you in a big way?
They say that the lessons that "cost" the most, teach the most. Thankfully, I learned the lesson of the cost of procrastination at a very early age. As I recounted it recently to a young college student, I realized again what an impact it had on my life.
(Warning: This story is not for the squeamish!) As a young girl, I had a bowl with two goldfish. I never really liked the fish and couldn't stand netting them out to clean the bowl. So I didn't. And the goldfish died. And then I didn't want to deal with the problem, so I put the bowl — complete with colorful rocks, a small castle, seaweed and two dead goldfish — on a shelf in the laundry room. Where my mother found it a week or two later. And then forced me to clean it out!
Thus, I gained a memorable lesson in the high cost of procrastination, a lesson that sticks with me to this day. Whenever I hear that little voice telling me to do something, I stop and at least put it on my "to-do" list, which I attack regularly.
What is your "little voice" telling you? Here are some of the most common financial procrastinations:
CHECK MY INVESTMENTS. When you receive your monthly mutual fund and stock market statements, do you leave them unopened in a pile? Even worse, if you've elected to receive the information electronically, do you simply delete the email or move it unread to a folder?
If you have just a vague idea of what funds are in your company 401(k) plan, or in your IRA, you could be making an expensive mistake. If you conveniently "forget" about that stock that is nearly worthless, you might want to check out its prospects — or sell and use the loss to offset a gain on other stocks.
If you go to TerrySavage.com, by clicking on the link on the home page, you can get a free one-year trial to Financial Engines — the advice program used by most Fortune 500 companies to help their employees make informed decisions about investing and saving for retirement.
Procrastinating about understanding, and if necessary, changing your investments can be an expensive mistake that compounds over the years and affects your retirement plans.
MAKE A WILL. Now there's a nagging thought that will be tough to bury! What happens to everything if you die suddenly in an accident? If your assets aren't in joint name, they will have to go through the expensive and time-consuming process of probate. Have you named a current beneficiary for your retirement accounts and life insurance?
It's likely that what you really need is a revocable living trust, which works much like a will in directing distribution of your assets, but also comes into play if you are incapacitated — think stroke or coma — allowing the successor trustee you name to step into your place and make decisions based on your instructions.
But if you create a living trust, don't procrastinate about renaming your house and investment accounts into the name of the trust (no tax consequences for doing this), or else your successor trustee won't have the assets to manage.
A final word: Use an attorney in your state to draw up these important papers. If you do it on your own, and make a mistake, you won't be in a position to correct it when it is finally discovered.
REVIEW HOMEOWNERS AND FLOOD INSURANCE. Surely the recent headlines about wind, rain and disaster must have caused a little nagging thought about your homeowner's policy. When was the last time you reviewed your coverage? Isn't it time to check with your agent to make sure your policy has been updated to reflect that extra bathroom and family room you added on? Or the fact that Grandma moved into the spare bedroom?
As a reminder, floods are not covered under your homeowner's insurance policy. That is covered by a separate Federal flood insurance program. If you're in doubt about what would be covered, ask about it before it's too late. Hint: Water damage from a tree that crashes into your roof is not treated the same as damage from a sewer that backs up into your basement!
I've recently written about life insurance, so I won't go into that topic here. Suffice to say, it is without question the No. 1 most procrastinated financial issue. You know who you are!
What other financial issues do you procrastinate about? Only you know what that little nagging voice is telling you to do. But eventually, the consequences of not taking action will catch up to you. And that's The Savage Truth!