Wednesday, December 29, 2010

New Beginnings Resolution #2 - Financial

*Disclaimer...I am not a financial advisor or professional. I am just writing based on my own experiences and what I have learned anecdotally.

By laying out my 2011 budget (which I will post more about later) I can now create my 2011 goals. I would like to save more money than we currently have to have a even more solid e-fund. I have made this a goal and have allocated $x monthly to make sure we reach and potentially exceed that, for example.

The other resolutions are to debt snowball our debts. This can be done by making a list of the debt you owe (I exclude our house from this but will say more about that later). You will want to make a list of all your debt (car, credit cards, line of credits, etc). Beside that write the balance owing on each, the interest rates, and your minimum monthly payments. The idea is that you'll pay as much as you can on the highest interest debt and the minimum on everything else. When that highest interest debt is paid off you throw what you were paying into the next one and keep going until you're debt free!

I excluded the mortgage from our debt snowball because it's "good debt" as they say and if you have a really good interest rate on your mortgage you might want to focus on the debt that is costing you the most. However if you switch your mortgage to bi-weekly payments you might be saving yourself a ton of cash over time. Some people prefer to add an extra payment over the year. When you're debt free, I would highly suggest paying what you were paying towards your debt towards your mortgage!

Helpful Tips - Communicate with your Creditors.

Make your Money work for you and pick up the phone. See if you can get your interest rates lowered! There is no need to pay extra amounts if you don't need to and often they can be lowered. If they can't pay off those cards and cut them up so you can't be tempted!

Ask your creditors to change the day your bill is due if you it helps you. Be aware that this may mean your next bill is pro-rated as it will have extra days. Budget for that.

Automate everything. We use our credit card for everything so we can get cash back points. It goes a very long way. Every bill we have is automatically put on so that we can save on stamps and any late charge fees. We also get the points from our credit card. We pay the balance off in full each month (if you don't then your money really isn't working for you)!

Switch Cards. If you use your CC for everything like we you have the right one? We get cash back with ours and it goes a long way. Some people prefer air points but be careful because with inflation this may not go as far as you think! Ask yourself if the card you have has value to you and if not consider switching!

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