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Before every new year I like to take stock of how I did financially the year before and where I hope to go the next year. I used to have big lofty goals because many experts say to dream big, but year after year I found that there were many factors that were out of my hands that made those goals impossible to reach. Especially between 2009 and 2011, when the economy was in bad shape, many of those large goals didn't have close to a chance of being reached.
With that said, there were some goals that were reached because they were more in line with what I had control over, and they were also modest. So I didn't generate an extra $40,000 a year in income, and I didn't make $10,000 a year extra in investments. I did have some successes, and for 2012, I reached many of my goals because I made them more modest.
What are those goals? Well, I'm not going to be specific, but I'll share 5 financial new year's resolutions that you can take a look at.
1. Reduce my credit card debt by 10%.That doesn't seem like such a lofty goal to a lot of people but trust me, it was a big deal. How did I do it? The first thing I did was stop using them. Actually, my one American Express card for business forces me to pay the entire balance every month so that one I used. For the others I stopped using them. I also increased my monthly payment a minimum of $20 each month over what they asked for. That was around 10% initially (yes, my payments were that much), but as the year went on that $20 represented a bigger percentage, plus I increased it occasionally to an extra $50. You can do it as well. How?
2. Budgeting monthly payments better.I've always done well with budgets but as an independent consultant, my money isn't consistent on a monthly basis anymore. However, budgeting is budgeting, and since I know on a monthly basis how much my payments are going to be, writing down, or in my case tracking everything in Excel, helps me know just how much extra money I have to work with. That helped me boost some of my payments.
3. Home investments.You're wondering what that is, right? Home investments means taking my change and putting it in a jar along with loose dollar bills that I have in my pocket when I get home. Since I stopped using credit cards it meant I used cash or my debit card for everything. When I used cash, I inevitably came home with change. The thing is if you take some of your change and bills and put it somewhere else, you never miss it because it doesn't seem like a lot. But I expect to have collected nearly $400 by the end of this year, which I know I'm close to because every couple of months I roll up the change. That gets heavy but who doesnít like heavy money?
4. Moving money from term life to whole life insurance policies.A couple of years ago I finally got through my mind the difference between term and whole life. For me term insurance means that no matter how much money I've paid into my policy, if I make it to 70 years old that money's gone. So I've been switching money over every six months into whole life, which covers the entirety of my life, to make sure my family is covered. By doing it in percentage increments an increase in payments doesn't hurt so much, and I have time to get used to it before it's time to do it again.
5. Increase my income by at least 10%.Although everyone doesn't work for themselves full time, everyone has the ability to make money outside of their regular job. In the book The Millionaire Maker by Loral Langemeier, she highlights many couples she worked with that had problems with their finances and convinced them to look at their skills, both professional and personal, to see what they could offer to make extra money. Some people were so successful at it that they changed careers, while others made enough extra money to help pay off bills and keep their families afloat. Think of it this way; even an extra $500 a month would help you feed your family and even enjoy going out every once in awhile.
It's the small changes that help most of us get out of debt, increase our assets, and feel better about life overall.
Mitch Mitchell is the owner and moderator for Top Finance Blog, which offers financial news, information and commentary.
FatWallet Asks the Experts:What Philip Taylor from PT Money is doing:
What Jim Wang from Bargaineering is doing:
The financial benefit isn't that you're going to save more money, but you prevent yourself from spending more money on other services you don't need. Personally, I pay for a monthly gym membership and use it enough for it to be worth it. But there are so many services that the gym offers that I've never used. This week, I started taking up swimming in the fantastic pool they have (and then relaxing in the hot tub afterwards). I've been a member for 3 years and this week was the first time I've ever been to the pool."
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