Foreclosures and company layoffs are up; the stock market and your 401(k) plan are down. So don't neglect to give yourself a New Year's financial checkup, said Kimberly Nute-Jones, a University of Illinois Extension consumer and family economics educator.

"You'll regain a sense of control over your situation as you diagnose your problem areas and prescribe solutions," she said.

"Life presents constant changes, such as birth, death, a marriage or divorce, a promotion or job loss, and your financial plan should be updated regularly to reflect those changes," she added.

To start, Nute-Jones recommends gathering all your financial statements. If this information is on a financial software program such as Microsoft Money or Quicken, the process will be a lot easier, she said.

"These records provide volumes of information on what you have, what you spend, and who you owe. It's important to review them for accuracy," she noted.

You'll need the following financial statements: banking (checking and savings); investment (personal and employer); loan (car, personal, etc.); wills and trusts; your paystub, W2, 1099 Misc., etc.; mortgage; credit card; insurance (life, home, auto, etc.); and your credit report.

"Look at your checking account statements and pay attention to how much money goes in and what goes out each month. Is there any unnecessary spending?" she said.

Are your beneficiaries updated on insurance policies, retirement accounts, wills, trusts, and bank accounts? What's the current rate on your mortgage or car loan? Is it higher than the current available rate?

How are your investments performing? Are they spread out over broad sectors, or are you invested in only one or two areas?

Is the information on your credit report correct? Are there any delinquent accounts?

After examining your financial statements, it's time to make a diagnosis, said Nute-Jones.

Here are some common problems and possible reasons they exist:

Symptom: Your car breaks down and you have to use a credit card or borrow money to get it fixed. Diagnosis: You don't have adequate savings in case of an emergency.

Symptom: You're paying overdraft, over-the-limit, ATM fees, and late fees on your checking account or credit cards. Diagnosis: Your finances are out of control. Your expenses are likely exceeding your income.

Symptom: You are barely paying the minimum on your bills. Diagnosis: You are probably over your head in debt.

Symptom: Your mortgage rate is about to adjust, and you're afraid you won't be able to afford the new payment. Diagnosis: You probably bought a home you couldn't afford with an interest-only or short-term adjustable rate.

Symptom: Your investment portfolio dropped over 60 percent. Diagnosis: Your investments aren't diversified enough.

Symptom: Life events, such as marriage, divorce, a birth or death, have occurred. Diagnosis: Your financial records are out of date.

Symptom: Your credit report contains errors or accounts that you don't have. Diagnosis: You may have been a victim of identity theft or fraud.

If you have any of these symptoms, Nute-Jones will write you this prescription:

• Set three attainable goals, such as increasing savings, decreasing spending, and reducing debt.
• Make sure you have 9 to 12 months of monthly expenses in an emergency fund.
• Reduce unnecessary spending. Review your budget for areas where spending can be cut (eating out, etc.).
• Eliminate high-interest credit-card debt. If you have paid your bill on time each month, ask the credit-card company for a lower rate. Make a plan to pay off debt. Sometimes starting with the lower balance is easier than focusing on the higher-rate cards that have higher balances.
• Eliminate bank charges. Balance your checkbook, pay your bills on time, and use your bank's ATM machine instead of incurring fees by using out-of-network ATMs.
• Invest smaller monthly amounts (dollar cost average) into an account instead of investing large lump sums.
• Diversify your investment portfolio. Have future contributions go into a different sector.
• Shop around for better terms/rates on insurance, credit cards, or mortgages.
• Update beneficiary information in cases of birth, marriage, or death.
• If there are mistakes or incorrect information on your credit report, contact all three credit bureaus to make sure your file is updated. (Equifax www.equifax.com; Experian www.experian.com; Transunion www.transunion.com). If you have been the victim of fraud, have a consumer statement placed on the account. If warranted, set up your credit profile so that new credit can't be issued without additional verification.

To further guard your financial health, visit U of I Extension's "Getting Through Tough Financial Times" website at http://www.ToughTimes.illinois.edu. There you'll find valuable information on handling the financial problems that many people are experiencing in today's economic climate.

Other useful websites include http://www.bankrate.com, http://www.annualcreditreport.com, and http://www.saveandinvest.org.

Source: Kimberly Nute-Jones, Extension Unit Educator, Consumer and Family Economics, nutejone@uiuc.edu