How one man went from Hollywood writer to diner owner -- and never looked back.

In 1998, Lawrence Rudolph was a TV writer living in Hollywood. Five years later, he's a co-owner of Lunchbox Food Co., a Greenwich Village diner that the New York Times described as bringing "a fine-dining sensibility to what by rights should be a funky waterfront dive." Here he describes the cost of following his dream.

Is opening a restaurant necessarily a symptom of a midlife crisis? Am I better off just buying a vintage muscle car?
Sports cars are for pussies; restaurants are for real men. The biggest problem you have with cars is changing your Pirellis every 10,000 miles. With a restaurant, your whole life is invested in it, so you can't just sell it if it becomes too much trouble. I employ 30 people. That's 30 families paying for schools, food, mortgages, and rents.

What do you wish somebody had told you before you opened lunchbox?
Don't scrimp on the big hires. As in any organization, one man cannot do it alone. You need the best people around you.

What's the biggest headache you encountered?
I took over an existing restaurant, which is by far the most cost-effective way into a restaurant, especially for a rookie. But this used-restaurant route means cleaning up after someone else's bad decisions.

How is your day organized differently than in your previous job?
It's really two business "days": a nine-to-five part and the after-five part. At five o'clock, we're moving into our third service of the day. We've already finished the business of the restaurant--paying bills, buying plates, and checking in with purveyors. At lunch, customers want to be in and out in 45 minutes, so we can get away with not being on the floor. Dinner, however, is a different story. If a customer's spending $125 on dinner for two, he wants to see that the owner appreciates his business. That's what I do while others are at home watching Friends.

What's it like to be working when everyone else is playing?
Sometimes it can be a drag, but I never took to the nine-to-five world anyway. I find it exciting working at 11 p.m. My office is literally a stage for all experiences. People are laughing, crying, kissing, and living right in front of me.

How do you balance being a husband, a father, and owner of a business that occupies so much of your time?
Your family really has to understand that this is what you do for a living and these are the demands. The good side is that your family can come to the restaurant.

So if it's so much work, why do guys dream about it?
Because they want to be Hugh Hefner or P. Diddy and invite everyone back to their place at the end of the evening. The catch is, Hef and Mr. Combs didn't get everyone to come over without a lot of effort.

A 20-minute review like this one, done monthly or at least quarterly, will give you peace of mind from knowing exactly where you stand financially and allow you to adjust accordingly with swiftness and confidence.

Most men treat their investment portfolios the way they treat loose change: The money's all scattered around, tucked away here and there; some of it's right where we need it, and some of it's under the sofa cushions.

Consider your own portfolio. Chances are, you've spent the past 15 or more years investing, securing assets, and building substantial wealth. But do you really know what you have, where it is, and how it has performed?

With stocks you can't even remember buying and money-market funds with various brokerages, it's easy to join the throngs of disorganized, careless investors. Just 21 percent of active investors regularly review account statements, read prospectuses, check out the backgrounds of their brokers, and have a financial strategy, according to a poll of 2,000 people conducted for the federal Securities Investor Protection Corporation.

Not staying on top of your finances is a major source of mental (and marital) stress. Who needs that? Here's a simple strategy to organize your financial life and improve the health of your wealth in just 20 minutes.


KNOW WHERE YOU ARE

Sit down at a large table with all of your financial statements, and list your assets on a legal pad. Be as exhaustive as possible: Review such holdings as money-market funds, 401(k) earnings, and college savings accounts.

Count
Add up the number of mutual funds you own. According to the Investment Company Institute, the average American investor holds four mutual funds. How many do you own? Double that? Triple? That's a red flag that your portfolio may be spread too thin. And you may find you have duplicate investments with several brokerages.

Consolidate
If, for example, you own several money-market funds in different brokerage houses, take a few minutes to move all of those liquid assets under the same roof. It takes just a phone call or Web order. Not only will you find your assets easier to track, but you may also save some money on annual fees. For instance, Schwab charges $45 per quarter for basic accounts worth less than $10,000 -- evidence of how maintenance fees from a few investments scattered about can add up. Look to consolidate other holdings, such as stocks, funds, and bonds, so they're less expensive and less time-consuming to follow.

GET RID OF PAPER
Have your account statements delivered via e-mail rather than snail mail. It takes just a few minutes to authorize paperless delivery, and it's a smart choice. Why? First of all, you'll save time by avoiding bales of paper statements that you'll eventually have to shred. If you can download your electronic statements into a financial-planning program (a solid one is Quicken 2006), tracking progress and potential problem areas becomes much easier and more time-efficient.

Second, now that identity theft tops $52 billion annually, digital transactions are safer than paper ones. According to a recent study by Javelin Strategy & Research, of Pleasanton, California, more than 68 percent of reported identity-fraud incidents are paper based, while less than 12 percent originate online. Reasons: It is harder for thieves to access Internet-based data, and online accounts tend to be checked more often, which nabs thieves sooner. "Shredding is overrated. All thieves have to do is go through your mailbox or garbage cans to get documents," says Javelin president James Van Dyke. "When you cut paper use, you cut that risk."


SET BENCHMARKS
Too many of us invest and save without a firm grasp on what we want to achieve. If that's you, earmark those objectives in detail. Be exceedingly specific. If, for instance, you're worth $500,000 now, set a goal of reaching $600,000 in 5 years. "The more detailed your objectives, the more focused your plan will be," says Jason Papier, a Sunnyvale, California, financial planner. "Money is an enabler, but you need to know specifically what you want to accomplish." Use an online calculator like this one to see what rate of return and additional savings you'll need to reach your goals.

If you have kids, don't just "save for college." Instead, figure out how much of the cost you will likely have to bear. Start by estimating future college costs by institution with the Princeton Review website. The site can also help you determine your chances of securing financial aid.


PUT OUT THE DOGS
The funny thing about mutual funds is that the "growth" fund you bought 15 years ago may have become a lot more conservative with age. Even worse, a fund heralded as a champion at one point may have turned into a dog. Case in point: Fidelity's Magellan fund was an Oprah-like celebrity with world-beating returns in the 1970s and '80s. However, Magellan has lagged the S&P 500 by 2.5 annualized percentage points over the past 3 years. "It's an 'index hugger,'" says Shannon Zimmerman, the advisor behind the Motley Fool Champion Funds mutual-fund newsletter service. "The very small bets it's made relative to the S&P haven't panned out."

X-ray your funds
Morningstar.com has a free service called "Instant X-ray" that'll give you a detailed picture of a fund's holdings and overall investment approach. Run stocks through it as well as 401(k) holdings.

Check for overlap
Services such as Morningstar help you not only dissect what you own but also uncover investments that are too similar. If nothing else, having too many similar holdings goes against the basics of diversification. "Many mutual funds and 401(k) portfolios have overlapping securities because money managers are always chasing 'hot ideas,'" says Lyle Wolberg,
of Telemus Wealth Management, in Southfield, Michigan. "You may find that your 10 different funds own virtually the same stocks."

Look out for investor bloat
A well-managed fund will often close to new investors. If your fund continually accepts them, beware. The performance of certain types of funds can be affected if they are constantly taking in new money. Call your fund company to check which of your mutual funds are still open to new investors.

Track performance
See how the fund has grown in assets since you bought it. Even funds that are not closed can be solid performers, provided they simply haven't gotten too big. Ask your broker or the fund company for the size of the asset base at inception and the fund's current size. Then check the concentration of holdings. "It's more art than science, but generally speaking, the more concentrated the fund's portfolio is, the more the size of its asset base can create a drag on the fund," says Zimmerman. "When the fund becomes too large and lethargic, it's difficult for managers to stake out meaningful positions in off-the-beaten-path equities. Few will take that risk."

Compare costs
When shopping for funds, utilize new Web sites that make it easy to compare expenses. The National Association of Securities Dealers offers free tools, including the Mutual Fund Expense Analyzer and the Mutual Fund Breakpoint Search Tool, the latter of which allows you to search for commission discounts. Likewise, indexuniverse.com is a free site that offers a function for screening index funds and exchange-traded funds (ETFs).


BUILD "SILOS"
Now is the time to build financial "silos." Like agricultural silos, in which farmers store specific types of grain, these are logical groupings that match investments, assets, and risk to particular financial objectives. Often, as we accumulate investments and assets, we latch on to holdings that are attractive but really don't match up with a genuine objective. Grab a sheet of paper and list the specific investment goals you identified earlier, such as planning for retirement or owning a vacation home. Then match up every investment and asset to one of those goals. If some of your investments lack clear objectives, that's another powerful argument for change.

Building silos for all of your goals can efficiently assess the need for adjustments and also avoid critical mistakes, such as assigning aggressive investments to a goal that doesn't mandate high risk. "It's a fast way to delineate risk and return," says Wolberg.


BOOST RETIREMENT SAVINGS
Most financial planners recommend that households be ready to replace 85 percent of their annual preretirement income each year during retirement. If you own a business, ask your financial advisor to look into 412(i) plans, which have significantly larger contribution limits than do other programs, as well as some tax advantages. To learn more, click here.

Consider a variable annuity
If you are an employee and have already maxed out contributions to your 401(k), look into funding an annuity. Your earnings will be tax-deferred, and you'll eventually receive a series of payments for the rest of your life.

With a methodical approach to saving and a strategy for cutting costs, you can go from zero to second-home hero in just 5 years. Here's your 15-step action plan for making it happen. You love your house. But let's face it, the passion has waned.

Sure, the old ball-and-chain is fully functional: It's close to work, in a good school district, and big enough to contain all your stuff. It's your physical shelter and a great tax deduction. But after a tough grind at the office or during lunch, when your mind wanders, you might find yourself fantasizing about something sexier, more exotic. Admit it: You're mentally cheating on your house. Embrace it: Buying a second home is the only form of betrayal that your lovely lady will ever endorse.

So let's cut to the chase: Can you make this happen? Yes, you can. In fact, with a little discipline, you can get there in 5 years. By earning just 4.5 percent on your money, you'd be able to secure a 10 percent down payment on a $500,000 dream home by socking away just $25 a day.

That's the price of 7 gallons of gas and a cafe latte.

Why the 5-year target?
Economic reality, that's why. You've got a retirement to prepare for, and you probably have kids to educate. You also need to be ready for any unforeseen financial challenges that crop up. Just as rising interest rates are helping cool home-price appreciation and discourage real-estate speculators, rising rates will boost the return on your savings. A 5-year runway enables you to leverage compound interest to get to your down payment without disrupting your other financial goals. Five years is also plenty of time to explore your second-home alternatives, find ways to trim costs, and turn your real-estate fantasy into reality.

If Lenin could muscle the entire Soviet economy in 5-year time spans, you can marshal your resources and achieve your second-home dream. Here's how to make it happen.

Lay the Groundwork
When you miss a few sessions at the gym, you have to work twice as hard the next time to make any progress. Your motivation might even slip. The same goes for your goal of owning a second home: Relentless dedication is everything. Your strategy begins with a realistic savings plan.

Create your down-payment strategy
To stay focused, open a separate account and call it your "sunny day fund." To enforce discipline, set up a monthly electronic transfer so you can move funds into the account without ever having to think about it. Then drop extra money into the account whenever you can. That's what Ethan and Renee Chandler did.

The Richmond, Virginia, couple started putting money away before they had settled on a location -- or even agreed that they would buy a vacation home. "Over six years, we hoarded any stock options, any bonuses, any pay increases," says Renee, 35. "We reduced all our debt, didn't do big upgrades to the house, and didn't sell those stock options to splurge on something unnecessary." When the time came, the Chandlers easily had enough cash for a 10 percent down payment on a $300,000 two-story gem on the bay in Vieques, Puerto Rico.

Invest your sunny-day fund wisely
There's another good reason to keep your down-payment money separate from funds you sock away for other goals: Your investing strategy should be radically different. As a rule of thumb, you should avoid stocks if you need the money in fewer than 7 years, says financial advisor Shashin Shah, president of SGS Wealth Management, in Dallas. The reason is simple: The market might be slumping just when you need to withdraw funds, forcing you to lock in a loss. Thankfully, rising interest rates mean boring is once again beautiful: A nearly risk-free, high-yield money market account, such as the one offered by online bank HSBCdirect, pays that magic 4.5 percent annually.

One-year certificates of deposit, which are slightly less liquid, are also market beaters: ING Direct, another online bank, offers 5.25 percent with no minimum deposit. If you're in a high tax bracket, adds Harold Evensky, chairman of wealth-management firm Evensky & Katz, in Coral Gables, Florida, you can bump up your returns by moving a portion of your money into a low-cost mutual fund that invests in tax-free, short-term municipal bonds.

Factor inflation into your savings equation
A big variable that affects your down-payment goal is the rate of appreciation in markets where you want to buy. Get a feel for what you're up against by doing some price sleuthing on specialty second-home Web sites like EscapeHomes.com or generalist real-estate sites like HomeGain.com. You can also buy intelligence from an outfit like the Local Market Monitor, a consultancy in Wellesley, Massachusetts, that calculates average prices for more than 100 markets.

With an estimate in hand, back into your savings goal by projecting what a home that you like in today's dollars will cost you down the road. Last year, for example, the median-priced vacation home climbed 7.4 percent. At that rate, a half-million-dollar retreat today would cost upwards of $700,000 in 5 years. If your goal is to finance 90 percent, your inflation-adjusted savings target should be $70,000, not $50,000.

Buff up your credit rating
As you launch your savings strategy, check your credit rating. Although lenders will typically look for a bigger down payment on a second home, it's entirely possible to front only 5 to 10 percent -- or even nothing at all -- if you're a good credit risk. Scrutinizing your credit report will enable you to correct errors early on that could derail you later. You should also take steps to improve your credit score by paying bills on time and reducing credit-card balances. A good score will ultimately decrease the interest rate on your mortgage, too.

Think Like a Developer
Last year, prices in Tucson, Honolulu, and Miami/West Palm Beach rose by about 25 percent. In Sarasota and Bradenton, Florida, prices were up 30 percent. To get more second home for your money and set yourself up for greater price appreciation after you're an owner, you need to start thinking like a real-estate developer. The pros make money by spotting bargain locations that will be raging in popularity years down the road.

Identify your ideal echo market
The key to finding a more attractively priced market that works for you is to isolate and replicate what you truly love about your first-choice location, says Dave Hehman, president of EscapeHomes.com. Make a list of your second-home must-haves and nice-to-haves, taking into account the setting (beachfront or mountaintop), amenities (fireplace or swimming pool), and recreational goals (boating or snowboarding).

Then test-drive a few alternative locations by renting there at different times of the year. You may find that less-trodden locales -- call them "echo markets" -- offer far better deals, enabling you to get the best of what you love at a fraction of the price (see "Affordable Escapism," on page 97).

Target the worst home on the best block
This developer-inspired strategy may enable you to buy for less money and bring your property into line with the nicest homes in the area, converting sweat equity to home equity. That's what Ted and Brenda Ginsberg did. The Houston-area couple bought a beachfront fixer-upper on Galveston Island, Texas, for $340,000. They took out a mortgage for $414,000 and rolled the difference into much-needed repairs. Today, their beachfront retreat is worth nearly $1 million.

Consider a historic fixer-upper
A certified historic property in need of significant work may be an especially good deal: Under the Fed- eral Historic Preservation Tax Incentive Program, you might be eligible for a 20 percent tax credit if you complete a "substantial" rehabilitation. To qualify, you must be willing to rent out the property and meet a host of other requirements.

For instance, in most cases your rehab expenditures in a 24-month period must exceed the price you paid for the home less the value of the land, after accounting for depreciation and any improvements that were already made. Additional local tax credits vary by state but are usually more substantial. In Arizona, you can cut your property taxes in half by signing a 15-year agreement to maintain a property; in most parts of Hawaii, historic properties are fully exempt from state property taxes.

Become a landlord
The thought of somebody stomping through your vacation pad probably seems sacrilegious, but the difference between hope and reality is an enticing income stream. "More and more people these days are renting out their property to defray operating costs, which have gone up considerably," says EscapeHomes.com's Hehman. Shop strategically. Homes with views and amenities tend to offer better rental prospects than secluded properties, says broker Ken Libby, who chairs the National Association of Realtors' Resort and Second Homes Committee.

In Stowe, Vermont, where Libby is based, a $500,000 home that is centrally located can deliver $35,000 a year in rental income, versus $20,000 for a more private home that is just a half mile away. But don't plan to use it during peak periods: In Stowe, says Libby, "the 10-day period from Christmas to New Year's is a third of your income." If you're willing to settle for nearby towns, says Libby, you could get a $500,000 home for $300,000, but you couldn't count on the rental check.

Buy raw land and build a prefab
Rather than acquiring land and then paying $300 to $700 a square foot to build a high-end residence from scratch, you could spend roughly half that on a prefab home. Once the domain of trailer parks and drab postwar housing, prefab designs now headline museum exhibitions and architecture competitions. "It's the most affordable way to get modern architecture," says Rocio Romero, a Chile-born architect whose LV series of prefab homes start at $120 a square foot.

Any buy-and-build strategy involves risks. Raw land has historically been a solid investment and can sell for a relative pittance, but local zoning rules and a lack of road access and utility lines can create headaches. John McAllister, president-elect of the Realtors Land Institute, a trade association, says buyers should stick with "improved land," which has been plugged in to the local electricity and water grids. Even with prefab, one big wild card remains: the cost of the foundation, which Romero says can run from $5,000 to $100,000, depending on the quality of the ground and the local price of labor.

Conduct a Reality Check
Once you've done some browsing in your preferred location, you need to get a handle on hidden expenses. "People become enamored of the gorgeous beach view and tend to forget about all the costs involved," says real-estate investor Christine Karpinski, author of Profit From Your Vacation Home Dream. To avoid a panic attack at your closing, explore ways to trim costs.

Reevaluate your love of the water
One largely unshakable truth is that waterfront property is going to cost you dearly. Besides the huge price premium, coverage for flooding or hurricane damage, repairs for sun or salt corrosion, even beach-erosion problems will all add to your ongoing expense. "Insurance [for a home] directly on the beach can be $3,000 and up," says Karpinski. "But for the exact property across the street, it might be only $500 to $700."

Don't remind the Ginsbergs. They love watching the sunset over the Gulf of Mexico, but they could do without the hurricane risk: Insurance against flooding, windstorms, and other coastal perils runs them about $10,000 a year on top of their mortgage payments.

Choose a condo
If you're targeting a second home locale that is hours away from your primary home, consider buying a condominium. Yes, it'll cost you more in association fees. But since the price of major repairs is shared and there is usually an on-site staff to handle maintenance matters, the trade-off can be worth it. "The majority of the big stuff that can go wrong -- roofing, siding, windows -- is all covered," says Karpinski. Condos have also proven to be the better investment: Over the past 5 years, for example, they've delivered 14.5 percent appreciation, compared with 8.3 percent for homes.

Consider collective ownership
Buying property with a friend or family member enables you to acquire an ownership share without having to bear the full cost of the purchase or the upkeep -- and you can pass your share to an heir ("tenants in common") or to the other person on the deed ("joint tenancy"). Of course, mixing family or friendship with real estate can be risky. So the first order of business is to hire an attorney to draft a detailed letter of understanding that lays out the ground rules.

"Whether it's who gets to go up this weekend or what happens if you want to paint a room blue, you want an agreement that covers a lot of ground," says Andy Sirkin, a San Francisco real-estate lawyer who specializes in co-ownership arrangements. Be sure your agreement gives you an out. One approach is to guarantee each owner the right of first refusal on the sale of a share after a predetermined standstill period, says William Baldwin, a financial advisor and attorney in Waltham, Massachusetts, who has drafted several arrangements. You could also agree to put the property on the market if neither party wants to buy the other out. "Each party gets a put option," says Baldwin.

Ace the Home Stretch
Lenders typically charge a premium of an eighth to a quarter of a percentage point on second-home mortgages. If you need rental income to make the numbers work, "you've moved over to the investment side of the ledger," says Keith Gumbinger of mortgage tracker HSH Associates. It'll likely cost you another half point. Look for any leverage you can when shopping for a loan.

Play lenders off against each other
Working with the lender who financed your primary home may streamline the application process -- and you're more likely to get a break on fees. Still, experts recommend shopping online and approaching at least two other banks and mortgage brokers to gain negotiating clout. You should also check in with local banks and brokers who can steer you to special deals. Get a preapproval letter for a mortgage from your bank a few months before you are ready to bid on a property.

Immunize your finances
When you finance property with somebody else, you risk losing it if your partner is no longer able to shoulder his or her portion of the mortgage payment. Traditionally, joint buyers have secured a single mortgage together, but the "new wave" in vacation-home financing, says Sirkin, is for each owner to obtain a separate loan backed by his or her fractional interests.

Although the interest rate will be higher to reflect the added complexity, your credit rating and your mortgage payments won't be affected by your partner's financial misfortune. Depending on the arrangements in your letter of understanding, you may still have to buy out your partner or take on a new one if he or she runs into money troubles. Regardless of the loan you choose, cut your risk by checking out your partner's financial qualifications well in advance.

Hire a good accountant
If you rent out your new home fewer than 15 days a year, you don't have to report the income to the government. But if you rent for longer, the IRS categorizes your home as a rental property, not a private getaway, and you must log those extra dollars on your tax return. The good news is that you can write off a portion of major expenses against the income you generate, including electricity, housekeeping costs, and property taxes. These expenses could eat up as much as 30 to 50 percent of your rental dollars, so it's important to maximize your deductions by working with an accountant who knows what he's doing.

Nobody said plotting your second-home strategy would be a walk in the park. It's a task that seems especially daunting given those double-digit real-estate price gains of the past few years. So here's some inspiration: Even amidst the frothiness, the typical second-home buyer is no Rockefeller. According to the National Association of Realtors, Mr. Typical earned $82,800 last year and paid $204,100 for a median-priced vacation pad. If he can make it happen, you can, too. After all, you're no Mr. Typical. And now you're much better prepared. Enjoy the hunt.

This is one New Year’s resolution you will be keeping. It will only take you a day, but the benefits will last a lifetime. Start with a balance sheet. This is going to become your personal yardstick of where you are financially, where you’ve come from and where you’re going. First, list all your assets, from your house and car to every investment and policy you have, not forgetting your current pension balance. Apart from providing a clearer idea of how much you’ve accumulated, it’s also a helpful list for your beneficiaries should you ever get run over by a bus. Next, list all your liabilities, from the outstanding balances on your car and house to your credit card and overdraft facility. Now you can determine your net financial worth and set financial goals to both reduce the liabilities and increase the assets. Each year, you will see your financial balance sheet improve and you can notch it up along with your children’s heights on the door.

Set a date for when you plan to be bond-free. Pay an additional amount into your bond each month to make the liabilities shrink faster. And have a financial plan in place to boost the asset side of your balance sheet. What do you want that asset column to reflect in five years’ time? Set annual targets so you know if you’re on track. Calculate how much you will need for retirement. Do you need to increase your retirement contributions? Remember, you’re likely to live 30 years post-retirement. Your broker should be able to provide you with a spreadsheet to calculate your savings requirements. Alternately, Old Mutual provides an online retirement calculator. Go to oldmutual.co.za, click on “personal”, look for the “retirement planning” heading and click on the retirement calculator. If you’re saving for your child’s education, know the target. How much is his or her education going to cost? If you’re looking at private education, take today’s school fees and increase them by 12 percent per year.

Have there been marriages, divorces, births, deaths? These all have an impact on your financial plan. Do you need to amend your will? According to Berrie Botha, CEO of Sanlam Trust, if you die three months subsequent to a divorce without changing your will, your ex-spouse will still inherit your entire estate if she was your sole heir throughout the marriage. You also need to adjust your estate planning in line with tax changes. For the 2007/2008 tax year, the primary deduction for estate duty increased from R2.5-million to R3.5-million and the capital gains tax exclusion for estates increased from R60 000 to R120 000. Do these changes impact on your list of life cover and pension fund beneficiaries? Do you have enough to provide for your dependants now that you realise how much school fees will set you back? If you’ve had a promotion, do you need to adjust your retirement funds as a result? Have you bought expensive electronic equipment or made renovations to your home that will affect your insurance premiums? According to Santam, up to 40 percent of shortterm insurance policyholders are underinsured by up to 45 percent and are putting themselves at risk. Caroline da Silva, head of portfolio management at Santam, says this means that a policyholder will only receive partial compensation after submitting an insurance claim. For example, the replacement value of your house’s contents is R200 000, but the sum insured is just R110 000, and during a burglary R20 000 worth of goods is stolen. Because you are underinsured by 45 percent, only 55 percent of the loss, that is R11 000, will be paid out. “Due to the fact that crime is top of mind when insuring,” says Da Silva, “we often only insure for what we think may be stolen in the event of a burglary.” But insurance is comprehensive, so you need to insure for what it would cost you to replace everything you own should your house burn down in a fire. The couch you bought five years ago for R1 500 might now cost R3 000 to replace. The contents of a house are insured at replacement value (vehicles are insured at market value); so, you have to revise your policy at least annually to ensure your cover remains adequate. When insuring the actual bricks and mortar of your home, bear in mind the current-day building costs since it is these costs that will be incurred when repairing damage. Draw up an inventory yourself or employ the services of a professional broker who can assist in a valuation.

Do your investments reflect your current needs and risk profile? Tony Barrett, head of wealth management at BJM Private Client Services, says that people are assessing their risk incorrectly. In addition, their advisors are often too conservative in their fund selection. If you’re under 40, you can afford to take a higher risk portfolio because you have time before you retire, which lowers the risk of equities. Equities are the best way to keep up with inflation, yet some brokers tend to be too but, if we’re losing money, we hold onto it in the hopes that it will recover. Speak to your brokers and, if they give a thumbs down, cut your losses. It’s also a good time to review your investment advisor. If you’ve been unhappy with their service or performance, get a second opinion.

Consolidate your investments and your debt. You’ve picked up several RAs, unit trusts and life policies along the way. Review them and consolidate into a few key investments. By having more than one RA, you’re not only paying additional debit order costs, but also more admin fees. The same applies with life cover. Flexible funds are a good option as the fund manager takes care of asset allocation decisions when they become concerned about market volatility. Consolidating also makes it easier to keep track of your returns. Consolidating debt is a buzzword at the moment, but if used effectively it can help you pay off your debt faster. If you owe less on your house than what it’s worth, you can increase your bond and settle expensive short-term debt like your credit card and car payments. The key is not to spread your payments over 20 years. On a car loan of R100 000 at one percent above prime (15 percent), your repayments will be around R2 350. Over five years, that would cost you R140 980. If you took R100 000 from your bond (at 12.5 percent) to settle the loan and still paid off the R100 000 in five years, you would reduce your payments to R2 230, saving yourself over R100 a month, but the cost of the total loan would be R133 600, a saving of over R7 000. If you paid the R100 000 off over 20 years, your monthly repayments would fall to R1 124, but would cost you R269 860 in total.

Are you getting a good deal on your home loan? In the UK, people view their mortgages as commodities and review their rates every year. As your salary increases along with the value of your house, you could qualify for a better interest rate. If you’re looking to consolidate, it’s an opportunity to shop around. The drawback is that there are costs involved which the mortgage provider can capitalise into the loan and you need to ensure that switching cost doesn’t negate the benefits of the lower rate. According to Simon Stockley, head of new mortgage provider Integer, you shouldn’t consider switching if you’re not going to be in your existing property for a period of three years as it generally takes 18 months to recoup the costs of the switch. Finally, do your homework before committing to a new lender.

This is one New Year’s resolution you will be keeping. It will only take you a day, but the benefits will last a lifetime. Start with a balance sheet. This is going to become your personal yardstick of where you are financially, where you’ve come from and where you’re going. First, list all your assets, from your house and car to every investment and policy you have, not forgetting your current pension balance. Apart from providing a clearer idea of how much you’ve accumulated, it’s also a helpful list for your beneficiaries should you ever get run over by a bus. Next, list all your liabilities, from the outstanding balances on your car and house to your credit card and overdraft facility. Now you can determine your net financial worth and set financial goals to both reduce the liabilities and increase the assets. Each year, you will see your financial balance sheet improve and you can notch it up along with your children’s heights on the door.

Set a date for when you plan to be bond-free. Pay an additional amount into your bond each month to make the liabilities shrink faster. And have a financial plan in place to boost the asset side of your balance sheet. What do you want that asset column to reflect in five years’ time? Set annual targets so you know if you’re on track. Calculate how much you will need for retirement. Do you need to increase your retirement contributions? Remember, you’re likely to live 30 years post-retirement. Your broker should be able to provide you with a spreadsheet to calculate your savings requirements. Alternately, Old Mutual provides an online retirement calculator. Go to oldmutual.co.za, click on “personal”, look for the “retirement planning” heading and click on the retirement calculator. If you’re saving for your child’s education, know the target. How much is his or her education going to cost? If you’re looking at private education, take today’s school fees and increase them by 12 percent per year.

Have there been marriages, divorces, births, deaths? These all have an impact on your financial plan. Do you need to amend your will? According to Berrie Botha, CEO of Sanlam Trust, if you die three months subsequent to a divorce without changing your will, your ex-spouse will still inherit your entire estate if she was your sole heir throughout the marriage. You also need to adjust your estate planning in line with tax changes. For the 2007/2008 tax year, the primary deduction for estate duty increased from R2.5-million to R3.5-million and the capital gains tax exclusion for estates increased from R60 000 to R120 000. Do these changes impact on your list of life cover and pension fund beneficiaries? Do you have enough to provide for your dependants now that you realise how much school fees will set you back? If you’ve had a promotion, do you need to adjust your retirement funds as a result? Have you bought expensive electronic equipment or made renovations to your home that will affect your insurance premiums? According to Santam, up to 40 percent of shortterm insurance policyholders are underinsured by up to 45 percent and are putting themselves at risk. Caroline da Silva, head of portfolio management at Santam, says this means that a policyholder will only receive partial compensation after submitting an insurance claim. For example, the replacement value of your house’s contents is R200 000, but the sum insured is just R110 000, and during a burglary R20 000 worth of goods is stolen. Because you are underinsured by 45 percent, only 55 percent of the loss, that is R11 000, will be paid out. “Due to the fact that crime is top of mind when insuring,” says Da Silva, “we often only insure for what we think may be stolen in the event of a burglary.” But insurance is comprehensive, so you need to insure for what it would cost you to replace everything you own should your house burn down in a fire. The couch you bought five years ago for R1 500 might now cost R3 000 to replace. The contents of a house are insured at replacement value (vehicles are insured at market value); so, you have to revise your policy at least annually to ensure your cover remains adequate. When insuring the actual bricks and mortar of your home, bear in mind the current-day building costs since it is these costs that will be incurred when repairing damage. Draw up an inventory yourself or employ the services of a professional broker who can assist in a valuation.

Do your investments reflect your current needs and risk profile? Tony Barrett, head of wealth management at BJM Private Client Services, says that people are assessing their risk incorrectly. In addition, their advisors are often too conservative in their fund selection. If you’re under 40, you can afford to take a higher risk portfolio because you have time before you retire, which lowers the risk of equities. Equities are the best way to keep up with inflation, yet some brokers tend to be too but, if we’re losing money, we hold onto it in the hopes that it will recover. Speak to your brokers and, if they give a thumbs down, cut your losses. It’s also a good time to review your investment advisor. If you’ve been unhappy with their service or performance, get a second opinion.

Consolidate your investments and your debt. You’ve picked up several RAs, unit trusts and life policies along the way. Review them and consolidate into a few key investments. By having more than one RA, you’re not only paying additional debit order costs, but also more admin fees. The same applies with life cover. Flexible funds are a good option as the fund manager takes care of asset allocation decisions when they become concerned about market volatility. Consolidating also makes it easier to keep track of your returns. Consolidating debt is a buzzword at the moment, but if used effectively it can help you pay off your debt faster. If you owe less on your house than what it’s worth, you can increase your bond and settle expensive short-term debt like your credit card and car payments. The key is not to spread your payments over 20 years. On a car loan of R100 000 at one percent above prime (15 percent), your repayments will be around R2 350. Over five years, that would cost you R140 980. If you took R100 000 from your bond (at 12.5 percent) to settle the loan and still paid off the R100 000 in five years, you would reduce your payments to R2 230, saving yourself over R100 a month, but the cost of the total loan would be R133 600, a saving of over R7 000. If you paid the R100 000 off over 20 years, your monthly repayments would fall to R1 124, but would cost you R269 860 in total.

Are you getting a good deal on your home loan? In the UK, people view their mortgages as commodities and review their rates every year. As your salary increases along with the value of your house, you could qualify for a better interest rate. If you’re looking to consolidate, it’s an opportunity to shop around. The drawback is that there are costs involved which the mortgage provider can capitalise into the loan and you need to ensure that switching cost doesn’t negate the benefits of the lower rate. According to Simon Stockley, head of new mortgage provider Integer, you shouldn’t consider switching if you’re not going to be in your existing property for a period of three years as it generally takes 18 months to recoup the costs of the switch. Finally, do your homework before committing to a new lender.

This is one New Year’s resolution you will be keeping. It will only take you a day, but the benefits will last a lifetime. Start with a balance sheet. This is going to become your personal yardstick of where you are financially, where you’ve come from and where you’re going. First, list all your assets, from your house and car to every investment and policy you have, not forgetting your current pension balance. Apart from providing a clearer idea of how much you’ve accumulated, it’s also a helpful list for your beneficiaries should you ever get run over by a bus. Next, list all your liabilities, from the outstanding balances on your car and house to your credit card and overdraft facility. Now you can determine your net financial worth and set financial goals to both reduce the liabilities and increase the assets. Each year, you will see your financial balance sheet improve and you can notch it up along with your children’s heights on the door.

Set a date for when you plan to be bond-free. Pay an additional amount into your bond each month to make the liabilities shrink faster. And have a financial plan in place to boost the asset side of your balance sheet. What do you want that asset column to reflect in five years’ time? Set annual targets so you know if you’re on track. Calculate how much you will need for retirement. Do you need to increase your retirement contributions? Remember, you’re likely to live 30 years post-retirement. Your broker should be able to provide you with a spreadsheet to calculate your savings requirements. Alternately, Old Mutual provides an online retirement calculator. Go to oldmutual.co.za, click on “personal”, look for the “retirement planning” heading and click on the retirement calculator. If you’re saving for your child’s education, know the target. How much is his or her education going to cost? If you’re looking at private education, take today’s school fees and increase them by 12 percent per year.

Have there been marriages, divorces, births, deaths? These all have an impact on your financial plan. Do you need to amend your will? According to Berrie Botha, CEO of Sanlam Trust, if you die three months subsequent to a divorce without changing your will, your ex-spouse will still inherit your entire estate if she was your sole heir throughout the marriage. You also need to adjust your estate planning in line with tax changes. For the 2007/2008 tax year, the primary deduction for estate duty increased from R2.5-million to R3.5-million and the capital gains tax exclusion for estates increased from R60 000 to R120 000. Do these changes impact on your list of life cover and pension fund beneficiaries? Do you have enough to provide for your dependants now that you realise how much school fees will set you back? If you’ve had a promotion, do you need to adjust your retirement funds as a result? Have you bought expensive electronic equipment or made renovations to your home that will affect your insurance premiums? According to Santam, up to 40 percent of shortterm insurance policyholders are underinsured by up to 45 percent and are putting themselves at risk. Caroline da Silva, head of portfolio management at Santam, says this means that a policyholder will only receive partial compensation after submitting an insurance claim. For example, the replacement value of your house’s contents is R200 000, but the sum insured is just R110 000, and during a burglary R20 000 worth of goods is stolen. Because you are underinsured by 45 percent, only 55 percent of the loss, that is R11 000, will be paid out. “Due to the fact that crime is top of mind when insuring,” says Da Silva, “we often only insure for what we think may be stolen in the event of a burglary.” But insurance is comprehensive, so you need to insure for what it would cost you to replace everything you own should your house burn down in a fire. The couch you bought five years ago for R1 500 might now cost R3 000 to replace. The contents of a house are insured at replacement value (vehicles are insured at market value); so, you have to revise your policy at least annually to ensure your cover remains adequate. When insuring the actual bricks and mortar of your home, bear in mind the current-day building costs since it is these costs that will be incurred when repairing damage. Draw up an inventory yourself or employ the services of a professional broker who can assist in a valuation.

Do your investments reflect your current needs and risk profile? Tony Barrett, head of wealth management at BJM Private Client Services, says that people are assessing their risk incorrectly. In addition, their advisors are often too conservative in their fund selection. If you’re under 40, you can afford to take a higher risk portfolio because you have time before you retire, which lowers the risk of equities. Equities are the best way to keep up with inflation, yet some brokers tend to be too but, if we’re losing money, we hold onto it in the hopes that it will recover. Speak to your brokers and, if they give a thumbs down, cut your losses. It’s also a good time to review your investment advisor. If you’ve been unhappy with their service or performance, get a second opinion.

Consolidate your investments and your debt. You’ve picked up several RAs, unit trusts and life policies along the way. Review them and consolidate into a few key investments. By having more than one RA, you’re not only paying additional debit order costs, but also more admin fees. The same applies with life cover. Flexible funds are a good option as the fund manager takes care of asset allocation decisions when they become concerned about market volatility. Consolidating also makes it easier to keep track of your returns. Consolidating debt is a buzzword at the moment, but if used effectively it can help you pay off your debt faster. If you owe less on your house than what it’s worth, you can increase your bond and settle expensive short-term debt like your credit card and car payments. The key is not to spread your payments over 20 years. On a car loan of R100 000 at one percent above prime (15 percent), your repayments will be around R2 350. Over five years, that would cost you R140 980. If you took R100 000 from your bond (at 12.5 percent) to settle the loan and still paid off the R100 000 in five years, you would reduce your payments to R2 230, saving yourself over R100 a month, but the cost of the total loan would be R133 600, a saving of over R7 000. If you paid the R100 000 off over 20 years, your monthly repayments would fall to R1 124, but would cost you R269 860 in total.

Are you getting a good deal on your home loan? In the UK, people view their mortgages as commodities and review their rates every year. As your salary increases along with the value of your house, you could qualify for a better interest rate. If you’re looking to consolidate, it’s an opportunity to shop around. The drawback is that there are costs involved which the mortgage provider can capitalise into the loan and you need to ensure that switching cost doesn’t negate the benefits of the lower rate. According to Simon Stockley, head of new mortgage provider Integer, you shouldn’t consider switching if you’re not going to be in your existing property for a period of three years as it generally takes 18 months to recoup the costs of the switch. Finally, do your homework before committing to a new lender.

This is one New Year’s resolution you will be keeping. It will only take you a day, but the benefits will last a lifetime. Start with a balance sheet. This is going to become your personal yardstick of where you are financially, where you’ve come from and where you’re going. First, list all your assets, from your house and car to every investment and policy you have, not forgetting your current pension balance. Apart from providing a clearer idea of how much you’ve accumulated, it’s also a helpful list for your beneficiaries should you ever get run over by a bus. Next, list all your liabilities, from the outstanding balances on your car and house to your credit card and overdraft facility. Now you can determine your net financial worth and set financial goals to both reduce the liabilities and increase the assets. Each year, you will see your financial balance sheet improve and you can notch it up along with your children’s heights on the door.

Set a date for when you plan to be bond-free. Pay an additional amount into your bond each month to make the liabilities shrink faster. And have a financial plan in place to boost the asset side of your balance sheet. What do you want that asset column to reflect in five years’ time? Set annual targets so you know if you’re on track. Calculate how much you will need for retirement. Do you need to increase your retirement contributions? Remember, you’re likely to live 30 years post-retirement. Your broker should be able to provide you with a spreadsheet to calculate your savings requirements. Alternately, Old Mutual provides an online retirement calculator. Go to oldmutual.co.za, click on “personal”, look for the “retirement planning” heading and click on the retirement calculator. If you’re saving for your child’s education, know the target. How much is his or her education going to cost? If you’re looking at private education, take today’s school fees and increase them by 12 percent per year.

Have there been marriages, divorces, births, deaths? These all have an impact on your financial plan. Do you need to amend your will? According to Berrie Botha, CEO of Sanlam Trust, if you die three months subsequent to a divorce without changing your will, your ex-spouse will still inherit your entire estate if she was your sole heir throughout the marriage. You also need to adjust your estate planning in line with tax changes. For the 2007/2008 tax year, the primary deduction for estate duty increased from R2.5-million to R3.5-million and the capital gains tax exclusion for estates increased from R60 000 to R120 000. Do these changes impact on your list of life cover and pension fund beneficiaries? Do you have enough to provide for your dependants now that you realise how much school fees will set you back? If you’ve had a promotion, do you need to adjust your retirement funds as a result? Have you bought expensive electronic equipment or made renovations to your home that will affect your insurance premiums? According to Santam, up to 40 percent of shortterm insurance policyholders are underinsured by up to 45 percent and are putting themselves at risk. Caroline da Silva, head of portfolio management at Santam, says this means that a policyholder will only receive partial compensation after submitting an insurance claim. For example, the replacement value of your house’s contents is R200 000, but the sum insured is just R110 000, and during a burglary R20 000 worth of goods is stolen. Because you are underinsured by 45 percent, only 55 percent of the loss, that is R11 000, will be paid out. “Due to the fact that crime is top of mind when insuring,” says Da Silva, “we often only insure for what we think may be stolen in the event of a burglary.” But insurance is comprehensive, so you need to insure for what it would cost you to replace everything you own should your house burn down in a fire. The couch you bought five years ago for R1 500 might now cost R3 000 to replace. The contents of a house are insured at replacement value (vehicles are insured at market value); so, you have to revise your policy at least annually to ensure your cover remains adequate. When insuring the actual bricks and mortar of your home, bear in mind the current-day building costs since it is these costs that will be incurred when repairing damage. Draw up an inventory yourself or employ the services of a professional broker who can assist in a valuation.

Do your investments reflect your current needs and risk profile? Tony Barrett, head of wealth management at BJM Private Client Services, says that people are assessing their risk incorrectly. In addition, their advisors are often too conservative in their fund selection. If you’re under 40, you can afford to take a higher risk portfolio because you have time before you retire, which lowers the risk of equities. Equities are the best way to keep up with inflation, yet some brokers tend to be too but, if we’re losing money, we hold onto it in the hopes that it will recover. Speak to your brokers and, if they give a thumbs down, cut your losses. It’s also a good time to review your investment advisor. If you’ve been unhappy with their service or performance, get a second opinion.

Consolidate your investments and your debt. You’ve picked up several RAs, unit trusts and life policies along the way. Review them and consolidate into a few key investments. By having more than one RA, you’re not only paying additional debit order costs, but also more admin fees. The same applies with life cover. Flexible funds are a good option as the fund manager takes care of asset allocation decisions when they become concerned about market volatility. Consolidating also makes it easier to keep track of your returns. Consolidating debt is a buzzword at the moment, but if used effectively it can help you pay off your debt faster. If you owe less on your house than what it’s worth, you can increase your bond and settle expensive short-term debt like your credit card and car payments. The key is not to spread your payments over 20 years. On a car loan of R100 000 at one percent above prime (15 percent), your repayments will be around R2 350. Over five years, that would cost you R140 980. If you took R100 000 from your bond (at 12.5 percent) to settle the loan and still paid off the R100 000 in five years, you would reduce your payments to R2 230, saving yourself over R100 a month, but the cost of the total loan would be R133 600, a saving of over R7 000. If you paid the R100 000 off over 20 years, your monthly repayments would fall to R1 124, but would cost you R269 860 in total.

Are you getting a good deal on your home loan? In the UK, people view their mortgages as commodities and review their rates every year. As your salary increases along with the value of your house, you could qualify for a better interest rate. If you’re looking to consolidate, it’s an opportunity to shop around. The drawback is that there are costs involved which the mortgage provider can capitalise into the loan and you need to ensure that switching cost doesn’t negate the benefits of the lower rate. According to Simon Stockley, head of new mortgage provider Integer, you shouldn’t consider switching if you’re not going to be in your existing property for a period of three years as it generally takes 18 months to recoup the costs of the switch. Finally, do your homework before committing to a new lender.