At the beginning of each year, we like to remind readers of several important financial housekeeping tasks, plus new tax rules, and current forecasts for rates and more. Even if your New Year’s resolutions have nothing to do with personal finance, these are key things to consider in January and beyond.
Here are a few special notes for 2025 to help your financial planning:
1. Student loan forgiveness: In what will probably be President Biden’s last action toward student loan forgiveness, he recently canceled federal student loans for 55,000 more workers through the Public Service Loan Forgiveness (PSLF) program, as CBS News reported. That brings his administration’s total of canceled federal student loans to $180 billion, which covers 4.9 million Americans.
The outlook for 2025 is shaky, however, as Investopedia noted earlier this week. For one, the fate of the new Saving For a Valuable Education (SAVE) repayment plan looks grim. The PSLF program may even be in jeopardy, and if Trump’s purported goal of dissolving the Department of Education comes to pass (though experts say that’s a big “if”), the fate of federal student loans would be up in the air.
For private student loans, U.S. News & World Report rounded up the best for 2025 — ernest was its top pick — with the caveat to first apply for federal financial aid.
2. Mortgage rates: Noting that 2024 mortgage rates stayed “stubbornly high,” despite Fed rate cuts — most of the year saw 30-year fixed rates well above 6% — CNBC cautioned readers not to expect much better for 2025, which it predicts to be “challenging.” The latest forecasts CNBC collected from several sources, including the Mortgage Bankers Association and Fannie Mae, include figures like 6.4%-6.6% and 6.2%, respectively.
3. The housing market: Realtor.com shared that the recent “glacial pace of home sales” is caused by, no big surprise here, higher mortgage rates. Not only was December 2024 the slowest December since 2019 and the slowest month in nearly two years, inventory dropped 8.6% from November. However, Realtor.com’s economists believe 2025 will bring a 1.5% increase in home sales.
When it comes to home buying, ABC News didn’t have great news to offer for 2025, sharing that a “fundamental mismatch of supply and demand [is] set to frustrate buyers.” Still, prices may decrease “a smidge,” it reported.
Meanwhile, NBC News cited Redfin, reporting that with new rental inventory becoming available, the national median asking rent price will likely remain flat over 2025.
4. CD rates: CD rates are unlikely to climb this year, according to NerdWallet, which reported both national average and high-yield CD rates have been notably decreasing, especially during the second half of 2024, when the Fed began lowering its federal funds rate.
5. Series I savings bonds: The current interest rate is 3.11%, including a fixed rate of 1.20%. This applies to bonds issued November 1, 2024, to April 30, 2025.
In case you’re not familiar, Series I bonds earn interest monthly, while interest is compounded semiannually; you’ll earn both a fixed rate of interest and a rate that changes with inflation. You can redeem your I bond after 12 months (or keep it in there as it earns interest for up to 30 years). If you cash in the bond in less than 5 years, however, you lose the last 3 months of interest.
Personal Finance Tasks to Do ASAP in a New Year
1. Review 401(k) Limits: The 2025 IRS limit on 401(k), 403(b), and most 457 plans, as well as the federal government’s Thrift Savings Plan, is $23,500, up from $23,000 in 2024. For people aged 50 and over, the catch-up contribution limit stays at $7,500.
If you’re making regular contributions from your paycheck, make sure you’ve adjusted your chosen amount accordingly if you want to max out your 401(k). It’s best to do this at the beginning of the year so you only have to do it once — if you do it in the middle of the year, you’re either not maxing it out or you’ll have to change your contribution again next January.
{related: where to save (when you don’t know what you’re saving for)}
2. Review IRA Limits: The IRS limit on annual contributions to an IRA remains $7,000. For people aged 50 and over, the catch-up contribution limit remains $1,000.
{related: not sure what to do first/next in your personal finance journey? here’s our money roadmap}
3. Reassess your debt: If your mortgage or (private) student loan payments changed recently, figure out how you can round the required amount UP to an even number, and make the change accordingly (paying the extra toward principal). Do what you can — every little bit helps with principal (this calculator from Bankrate helps you see how much), and knowing that a memorable round number is coming out of your bank account helps you to know if your balance is sufficient.
{related: how to decide when to pay down debt — and when to save}
For example, if your mortgage payment is now $3,218, you could pay
- an extra $282 toward principal each month (total = $3,500 each month)
- an extra $82 toward principal each month (total = $3,300 each month)
- an extra $782 toward principal each month (total = $4,000 each month)
- or an extra $32 toward principal each month (total = $3,250 each month)
4. If you have a 529 plan, reassess your automatic contributions. Each state occasionally changes the amount you can give to get a state income tax deduction; if you want to max it out, then assess.
Remember, as of January 1, 2024, you can roll unused 529 funds into a Roth IRA for your child without tax penalty. Saving for College has all the details.
{related: the 411 on using 529s to go back to school}
5. Reassess your subscriptions and other repeating payments to make sure you’re not paying money for services you’re not using — and review any new prices. So far, one streamer already raising rates for 2025 is YouTube TV, which now runs $82.99/month. (It launched in 2017 at $35.)
6. Automate what you can: Consider setting up automatic investing, or automatic saving to amortize big expenses. Kat has a small amount of money automatically moved from checking to her online savings accounts to help her save for multiple financial goals, like her emergency fund, vacation fund and predictable large bills (term insurance, accounting advice, etc.).
What personal finance tasks would YOU do ASAP in a new year, readers? What have you done already this year, and what has this list inspired you to do?
{related: what was the best financial decision you made last year? (2018 discussion)}
Stock photo via 123rf.com/serezniy
