As individual investors, there isn’t much we can do about the decision to avert the infamous fiscal cliff, which is the combination of massive tax increases and spending cuts that would eventual hurt our economy if nothing is ultimately done in Washington. Most of us did our job voting in the November elections. We hope that cooler heads prevail and an agreement to at least address the tax and spending issues that confront us goes through by year-end (although I am not holding my breath!).

But as individuals, we too have our own personal fiscal cliffs to address and fix. Fortunately, we can make decisions more quickly than government. More importantly, we can make decisions that can have a more longer-lasting impact on our situation.

So as we head into a new year, I believe it is a good idea for investors to reassess not only their investments, but their entire financial situation. As we enter 2013, I would like to offer insight on the following three areas:

• Debt levels. With interest rates at all-time lows, this is a great time to assess your debt and the types of debt you carry. If you haven’t considered refinancing your mortgage, then this is a great time to do so before interest rates go up. They are not going to stay low forever. You can even consider refinancing a high interest car loan if your credit is strong enough. The best way to minimize interest costs and manage debt is to keep your fixed debt payments at less than 30% of your gross income.

• Cash flow. There may not be much you can do about your income situation other than asking for a raise (a fine idea by the way), but you can consider assessing the expense side of your own income statement. As individuals, we should act more like accountants and review our revenues and expenses more closely. One of the programs I have been using for years is Quicken. This is a relatively inexpensive software system that allows you to track and monitor your spending as well as investments. Most people use it to balance their checkbooks, but it is more powerful than that. You can categorize expenses and really drill down to where your money goes each month and year. Who knows, you might find that extra $50 to $100 per month to invest by cutting back on certain expenses.<!> Those extra savings can add up to thousands of dollars over time.

• Net worth. If you haven’t already done so, now is the time to review your investment portfolio, including retirement savings like 401(k)s. With home values expected not to rise very much in the coming years, one of the areas that can help increase your net worth (the difference between your assets and liabilities) is your investment portfolio. If you are working and saving for retirement, you might be eligible to contribute to an employer retirement savings plan like a 401(k). If you work for yourself, there are a variety of retirement plans available for you to establish. It is a good idea to discuss these options with a credible financial advisor and/or an accountant.

Most retirement plans allow you to contribute up to a certain dollar amount each year based upon your income. Regardless, think about what your options are and map out a plan to maximize your retirement savings. How much you save each year can be as powerful as what type of investments you own. However, it is critical for people to review their portfolios to make sure they are positioned for growth. Too many investors these days are giving up on stocks as their primary vehicles for growth and relying on things such as annuities and other income products. While some of these products may be suitable, they will not be enough to increase your net worth and put you on a path for sound footing down the road.

Be open to change in 2013 and don’t let your fears get in the way of improving your financial situation. Best of luck in the New Year!