Improve Your Finances in the New Year
It is the start of a New Year and most people would like to make some changes and improve their lives. Resolutions having to do with finances are some of the most popular resolutions to make. This is because most people would like to get a better handle on their finances. It is possible and now is certainly the time to do it, whether you are reading this around the New Year or not, now is always the time. Let's talk about some ways to improve your financial situation.
Increasing your retirement savings should be high on most people's list. With Social Security seemingly out of the picture for many people it is more important than ever to save on your own for retirement. Roth IRA's are what I would consider the best place to start. That is assuming you are already contributing at least up to the matching amount in your 401K at work. If you are not contributing to a 401K currently it is time to start. If you do not have that option, start a Roth IRA. This money will grow tax free for you for all the years it is open. Even if you are only 20 you need to be saving for retirement! The earlier you can start the better.
Paying off your debt should also be very high on your list. What is debt? If you owe anyone money, you are in debt. Mortgages, cars, boats, student loans, credit cards, furniture, motorcycles, medical bills, your mother, etc. - these are all considered debt. (I know plenty of people that think they are not in debt because they don't owe on credit cards, so I wanted to clarify.) Your financial position will never improve very much if you owe a bunch of money. Making this a priority is very important if you are serious about improving your situation. Maybe you won't be able to pay anything off this year, but reducing the amount of debt you have is always a good thing. Oh and stop taking on new debt while you are at it.
Analyze your spending habits and take steps to fix problem areas. Think about your daily money habits. Do you stop for coffee every day? Do you go to the book store weekly and buy a few books or magazines? Do you go through the drive through several times a week for lunch or dinner? These types of spending habits can destroy a budget and make your life very stressful. I am not saying these things have to be cut out completely, or even at all. You have to make that decision.
If you have analyzed your spending, set up a budget, have the money to pay for lunch out every day and that is what you want to do, then do it. But if you are failing to make payments on your debt, or using your credit card to pay for lunch out, then this type of spending is a problem area for you and you need to fix it. After analyzing, make sure you take some steps to fix your problem areas.
Review your auto and homeowners insurance policies. Take 15 minutes and call another company and see what kind of rate they can offer you. You might be surprised at how much money you can save each year just by spending a few minutes and switching companies. Actually you don't have to switch companies, you could call your current company and tell them what their competitor just offered you and give them the option of matching that. Chances are they will match or even beat the other company just to keep your business. This money saved could fund your Roth IRA or go towards paying down debt.
Take a look at your utilities such as phone, cable and internet. Are you paying for a bunch of extras that you aren't even using? Take a few minutes to call your current company to drop things or call another company and check out their deals. Frequently you can save a good chunk of change each month by dropping things or switching carriers. It is really worth looking into.
Start the New Year by trying something new. Maybe it will be checking out the new consignment store in town or packing your lunch for work. You could look through the coupons for a change and see if there is anything you could use. What about carpooling? I know several people in my neighborhood that work in the same building 45 minutes away. Of course they don't carpool, but it wouldn't be that hard. Ask around, you might be surprised at how this could work out for you, even if it is just a couple of times a week.
How about turning the TV off and reading a finance book? They aren't all boring. There are so many things out there to try - pick something new that would improve your financial state and try it. It doesn't mean you have to do it forever, but it might work very well for you and end up saving you a bunch of money.
If you aren't already, put your savings on autopilot. It is so much easier if you never see the money. Have your paychecks set up to put some into savings immediately. Even if it is just $10 a pay period you need to start with something. Just getting into the habit is so important.
Set up a freedom account. I got this wonderful idea from Mary Hunt's book Debt Proof Living. Figure out as many expenses as you can that are irregular. For us this includes car insurance, kid's activities, HOA dues, veterinarian expenses, school supplies, vacation, home repair, car repair and subscriptions. These are all expenses that come up through out the year, but not every month. Some are random; some are set every six months, etc. Having an account set aside with money going into these each payday has been a life saver. No more panic when the dog needs to be seen, when the car insurance is due or when the Sam's Club membership is due.
This one step has done so much for helping us get our finances in order. Prior to this it seemed that "something" was always coming up and preventing us from getting ahead. Now that we plan for all these things, we don't usually have unexpected things pop up. If you don't do anything else this year to improve your finances, planning for things and setting aside money to cover them is so important.
It is not IF your car will need repair, but WHEN. At some point cars need work done, even things like 30,000 mile check ups or new tires. The same for your home or your dog - things break, animals get sick and cars need to be insured. Take the time to plan for these in advance and it will save you so much stress and hassle later.
Let's start the New Year off right by improving our finances. Money, money arguments and money problems is the leading cause of divorce and cause most people stress each and every year. Take control of your finances and take steps to improve your situation this year. It will pay off for the rest of your life.