A mid-year financial checkup is important in a year in which the world doesn't want us to get too comfortable.

The first half of 2010 is yesterday's news. But whether news is good or bad the remainder of the year, you can't deal with it intelligently unless you fully understand your current condition. In some cases, corrective action should be prescribed.

"Everyone is breathing easier because the world did not end," says Marilyn Capelli Dimitroff, certified financial planner and president of Capelli Financial Services, in Bloomfield Hills, Mich. "But you really need to look at finances in relation to your own needs, goals, and long-term financial health."

Get started by writing down all your sources of income in the first half of the year. Use your checkbook and credit-card statements to list all expenses for that period. Subtract that from your income. If cash flow is positive, that's a good sign. If negative, it indicates how much you must decrease expenses to improve your situation.

Use this to project income, expenses, and savings for the second half of 2010. If some of what you budgeted in the first half of the year turned out to be unrealistic, adjust accordingly. Diagnosing your spending habits helps prescribe a workable budget that includes regular savings and investment.

"My clients are seeing and hearing more of the negative than the positive things," says Evelyn Zohlen, president of Inspired Financial, in Huntington Beach, Calif. "Part of my responsibility as their adviser is to bring some balance and objectivity to what's going on in the market."

Review your half-year gains and losses in stocks, mutual funds, and fixed-rate investments to see whether your portfolio needs rebalancing. Then seek out current bargains.

"The first thing to do at mid-year is ask yourself whether you need to rebalance your portfolio," says Ray Ferrara, president of ProVise Management Group LLC, in Clearwater, Fla. "You should have an asset allocation model, and when holdings go outside its parameters you should look to sell the winners and buy the losers."

The most difficult part of an investment plan is staying disciplined with your allocation even though temporary events may draw your long-term logic into question, he says.

With an asset allocation plan, some portion will include bonds. Many experts believe long-term interest rates will drift back to their historical norms or higher. Existing bonds with lower rates would decline in value versus new higher-rate offerings, so you may want to reduce your exposure to bonds greater than five years duration and shorten maturities, Ferrara says.

Zohlen sees merit in shorter-term bonds over some other choices.

"I don't do a lot of tactical moving of money, but one thing I am doing is staying away from TIPS (Treasury Inflation Protected Securities) and instead buying regular short- and medium-term bonds," says Zohlen. "Because inflation right now is so low and interest rates so low, I have no love for TIPS."

Your debt can land your finances in trouble. Go over all you owe and pay off highest-rate debt first. Develop a plan to pay down credit-card bills, loans, and car payments as quickly as possible so that in the long run you'll have more to invest.

"Credit card debt carries the highest interest rate, so if a client has $6,000 in credit card debt and $10,000 in the bank, that client needs to examine a few things," says Ferrara. "When you consider you'll either pay $840 in interest on the credit card or earn $30 in interest on the money in the bank, deciding what to do is not a tough decision."

Set realistic goals. Choose short- and long-term targets, write everything down, and reassess every six months. Invest the maximum in employer-sponsored retirement plans and inquire about the strength and solvency of your firm's pension plan.

Be insured. Review all your insurance coverage, taking into account those dependent on you. Examine life, homeowners, auto, and disability coverage you carry to see if it meets current needs. Make or update a will and estate plan. Give someone durable power of attorney in case you become incapacitated.

We're not out of the woods yet, with potential economic and market problems ahead. Build an emergency fund of three to six months of living expenses in a liquid money-market or short-term bond fund.

Here's what financial planners are concerned about in the second half of the year:

"The most worrisome thing to me would be interest rates being held artificially low for too long because it will mean that money will be just too easy to get," says Zohlen. "Companies love this because they get cheap money to fund capital projects, but the stock market reacts by going up very quickly and then painfully correcting."

"I would not be surprised to see an interest rate increase in the last quarter of this year," says Capelli Dimitroff. "The government is committed to low rates for an extended period of time—but that usually means until the Fed changes things."

"What worries me the most is if companies don't start hiring more people, and what that would do to consumer confidence and the recovery," says Ferrara. "That continued high unemployment could really stall the recovery."