January 1st is here.
Every New Years day we all set resolutions to change things in our lives that we don't like. We make resolutions about money, our health, and our relationships that don't last more than a month or so. Then, we fall back into our old routine that didn't get us where we really wanted to be in life.
Do something different this year. Make your resolutions... life changes. And wait to actually start seeing results before you get discouraged and give up. Part of the problem with the way we make resolutions is the idea of the change is way better than the hard work and sacrifice it takes to actually be the person that we dream of.
We are lazy. I know I am. I have never really tried hard at anything, in my life. I have done pretty well for myself considering I have never tried. I somehow managed to luck into a pretty comfortable life. I work and I live. I have gotten comfortable and stopped trying to reach the way that I sit around and think about life being.
Making changes is hard. But... One interesting fact about most people is that once we see the beginnings of results, we are more likely to keep up with the activity.
This being a personal finance blog, I am going to give you some easy tips to make changes to your finances that will help you keep your financial resolutions.
1. Write down 3 short term goals. These are goals that you set for 6-9 months. Like, saving enough to take a trip this coming summer. Write down 3 medium range goals. These are goals that you set for 9 months to 2 years. Like, planning for a wedding. Write down 3 long term goals. These are goals that will take longer than 2 years. Like, buying a house, child's college education, or retirement.
2. Write down your monthly bills. Everything you have to pay, every month. Then, make a list of everyone you owe. Friends, family, ...everyone. Go to Annual Credit Report.com and fill out the form to get ONE of your credit reports. (To do this read this.) Add those to your list.
3. Arrange the list so that your debts are in an order that fits your situation. The most important debts should be paid off first. Paying bills up to date is the most important priority. Then, use the Snowball Debt Method to pay down the rest of your debt list.
4. Make a budget. Give yourself a set amount for each expense each month. Don't go over that amount. Like, say you are only going to spend $25 a month eating out, $150 a month for transportation. The point of the budget is to start tracking your spending and controlling your money. When you make your budget, cut back on wants and focus on needs. Open a Mint account to organize everything.
This is going to seem like a lot but over the next couple months we are going to go more in-depth with each step. So, for now let's start with step 1. write down goals.
3 Short term goals -
Pay off short term debt. Save for summer trip. Get frames for my degrees.
3 Medium range goals -
Pay off credit card debt. Move. Save $5,000 in my Emergency Fund.
3 Long range goals -
Pay off my car. Pay off my student loan debt. Buy my dream house and car.
What are your goals?
Stay tuned for step 2 - organizing our bills and debts...