What, out of money already?

I hope not. It’s only the first week of the new year! But if you’re like many people, including myself, the months of January - March are always a bit of a squeeze for basic personal finances.

The problem is that a lot of bills and other expenses pile up starting around Thanksgiving and extending into early January. This traffic jam of bills can really pack a punch in the first months of the new year. Because of that, it’s a good idea to try and budget for the new year. Set aside some cash early to pay those bills off promptly.

Otherwise, you might end up in credit card hell.

Here’s a breakdown of some of the bills that tend to cluster together at the end of the new year. Some are just regular items and others are once a year payments. In any case, it’s a good idea to start thinking about these things around November or so. I finally figured out several years ago to be prepared for it, after we had an onslaught of bills pile up, causing our petty cash fund to be severely drained.

Holiday Shopping & Other Credit Card Bills - that new Roomba you splurged on for nice Aunt Myrtle? It’s going to come back to bite you in the ass in January. Reading January’s credit card bill can be like waking up with a hangover after a Christmas spending spree.

Property Tax Bill - Yours will probably vary, but we have half of ours always coming up in the first few months of the new year. It’s a nice grand (pun intended, ours is more than a grand) surprise to add to the list of bills to pay.

Homeowner’s Insurance - Again, this varies for every homeowner and for the type of coverage you have. But ours kicks in at the beginning of the new year and takes up a nice chunk of change that could otherwise be used for other things.

Car Insurance - Ours kicks in around February and provides us with another nice little bill we have to pay at the beginning of the year. Often, they’ll give you the option of paying it in installments. NEVER do this if you can avoid it, as they usually tack on a service charge of $4-5 PER extra payment.

Mortage, Rent, Car Payments - You’ll be paying these throughout the year anyhow, probably monthly. But it definitely adds just more fuel to the fire when you have to pay other bills. Actually, our tax advisor always gets us to try and pay our January mortgage ahead of time in December in order to claim it for that year’s taxes. So it’s a bit of a double whammy.

Tuition - I’ve been out of school for too long - but back in the day, I remember crunch time for money was when quarterly college tuition was due. Luckily, I was at a public school - but it was still tough to pay tuition right when other bills were coming up at the start of the year.

IRAs (by April) - If you’ve been contributing to your IRA, you know that the cutoff for the previous year is actually in APRIL of the following year. That is, you can make contributions for 2008 for your IRAs up until the day taxes are due in April 2009. If you’re like me (bad me… bad!), and you don’t have a set schedule of contributing each month, you’re going to probably wait until near the end of the year to contribute. This adds quite a bit to the pileup of bills, since the limit in 2008 was $5000.

Estimated Tax - Oh the UNJOY of having to pay estimated taxes. Those who aren’t self-employed or own their own business can luckily ignore this bullet point. Estimated taxes for the last quarter are usually due around January 15. Be sure to set aside some of your hard-earned funds to pay our wonderful (no sarcasm, of course) IRS. Also, don’t forget that you also need to pay any estimated taxes for your state, if it applies.

Medical / Dental / Eye Visits - A lot of people try and squeeze in visits to the doctor or dentist around the holidays. This is usually done in order to use up any medical benefits that your company may pay for that will reset come January. In those cases where the company covers everything, there’s not too much to worry about. However, if the company doesn’t cover the entire amount, be aware that your bill will probably come right when you’re trying to pay for everything else at the beginning of the new year.

Subscriptions (Magazines, Domains, Cable, TV, Internet, etc.) - Most of these are monthly things again, but others like magazine subscriptions and domain name bills usually happen less frequently and often tend to come at the beginning of the year. If possible, try not to start your yearly cycle for a magazine or domain name at the beginning of the year, when you’ll be paying off so many other things.

Home Improvements - A lot of people I know like to “start off the year right” by doing home improvements just before the new year. While it’s great for morale to get a new kitchen, it can hit you hard when the bill comes in February and you’re trying to pay everything off. If possible, try and wait until later in the year to add that movie theater to the back of your house.

Various Utilities - The water, electric, gas and phone bills don’t pause in order for you to ring in the new year. Make sure to set aside enough to pay those as well. Our city bill actually comes once every two months, so it’s a larger payment that hits even harder.

[Editor’s Note: And don’t forget to budget some money to buy all those lottery tickets…]