Friday, October 14, 2016

Getting Your Money Game Right

As the end of the year quickly approaches, Fall is a good time to review those 2016 resolutions you made in January and, if you've fallen short, prepare to revamp them as part of your 2017 goals. If you're like me, a financial goal of some kind (spending less of this, saving more of that, paying off this or that) has found itself on your list consistently. And since it's been on mine consistently over the years, it's actually showing up on my list less and less now, through hard work sans a few human hiccups here and there. I'm far from a money guru, but under the guise of "each one, teach one" below are a few tips I've discovered--and some I've learned from others--that have helped me move from financial frustration to a little more financial freedom.

1) Don't Budge on Your Budget: Have you ever realized that although you look forward to annual raises and annual bonuses, rarely is it reflected largely in your financial growth. There's a reason for that: the more we make, the more we spend, so one of those actions have to stop before a real difference can be seen. The best way to do that? Don't change your monthly spending habits even if your paystub changes. I know how tempting it is to get that bump in pay and suddenly you're ordering the Venti size Starbucks mocha as opposed to your regular Tall order. But as my mama used to say, "Every penny counts," so stop wasting the "pennies" you've just been given on things you don't really need and start counting them instead. Like, literally. There are many apps and online spreadsheets that will allow you to track every dime you spend. When you can see how you're spending every dollar, you're less likely to waste them. Now, I know that's easier said than done when you review your online banking balance and feel like poppin' your collar. So, choose not to see it. How you ask? That takes me to point #2.

2) Don't See It, Save It: It's said that what you don't know, won't hurt you. Well, what you don't see, you can't spend. If you're trying to build a "rainy day" fund, have your accounting manager at your job divide your direct deposit, where a percentage of your check or a set amount goes directly into a savings account. Whether $20 or $100 a month, by the end of the year, you could easily have $240 to $1,200 saved. Continue this practice for the next five years, and $6,000 will be sitting in your savings account before you know it--that is, if you haven't had too "stormy" of a time in the process of saving it, because, hey, life happens. But one thing's for sure: once you begin on this track in addition to point #1, you'll hardly miss it. If your rainy day fund is solid, consider putting that excess in your company's 401k plan, in which most companies will match your contribution, which makes for a nice, needed nest egg in your golden years.

3) Set It and Leave It: Before or in addition to embarking on point #2, the one thing none of us can afford to have is huge credit card balances. We all know the game: you charge that new 50" smart TV for the "low" price of $500, pay the minimum balance due of $10 each month, and with 15% percent interest, before you know it, you've actually paid $720 in total by the time you pay it off. Not jaw dropping, but imagine an initial charge of $1,000 or more. Trust, with interest, your statement can easily become unrecognizable. What to do? Set a payment and walk away. 

At times we can be our own worst enemy, vowing to make more than a minimum payment on our balances, but then another awesome offer presents itself, and we're back to only droppin' that $10 on our balance and racking up more debt purchasing something else exciting and new. This is when autopay becomes your best friend. Every credit card online banking site has the option to set a monthly amount to be paid on a certain date. Even if you're paying $10 more than the minimum, you're beating the credit card companies at their interest game and paying that card down consistently without having to make a conscious effort to do so each month. And I won't even tell you the elation of logging on a few months later and seeing a zero balance and the words "No payment due." If your budget has survived during this sacrifice, then once you've paid off your balance, consider directing that monthly payment to one of the options discussed in #2 above.

4) Master the Housing Hustle: If you're embarking on being a homeowner, the best advice I can give is to"not believe the hype." Or, at least, not buy into it. Based on your earnings and credit score, you'll be told how much house you can afford. But just because you can afford it, doesn't mean you have to. Buying a home at least 10 to 20% lower that what you qualify for, will lessen heartache when those "rainy days" come--and they will. When you're living right up to the dollar, there's no financial room for much else. 

For existing homeowners, if you haven't refinanced your home in a while, and your credit is in good shape, it may be time to take advantage of some of the great interest rates floating around out there that can significantly lower your monthly payments (before a new administration takes office, which can make the housing market and its rates shaky for a while). Many of us jumped on 30-year fixed rates, as first time homeowners, to take advantage of a lower monthly payment. However, with rates as low as 3.1%, if the lower rate isn't really your concern, then consider refinancing at a 15-year rate, and paying off that home faster. When you realize how quickly time flies, having a mortgage off your plate in half the time is the gift that keeps on giving. 

5) Taking Care of the Tykes: One thing that remains a constant is the rising cost of college tuition. When my niece was born, my brother immediately began paying into Maryland's 529 College Plan program which allows you to save funds that are exempt from federal taxes. It seemed so far off, it almost seemed he was jumping the gun. That is, until my niece entered her first year of high school this August and it seemed like just yesterday I was holding her in my arms. Off to college in what will be a quick four years, and I see how my brother made the best decision ever. Whether your little one is two or twelve, it's never too late to start saving for them now. Look into your state's 529 plan or enroll in the Gerber Life College Plan where, much like life insurance plans, you can pay a fairly low monthly cost, which will be a great help in 18 years. Also, with the Gerber plan, the money can be used for more than college, just in case your little tyke has other plans in mind for their future. 

6) Check It and Check It Again: Last but not least, there's nothing that matters more in all of this than keeping a healthy credit score, so pay bills on time, don't rack up too much debt, and check your scores often, as there could be old accounts or erroneous accounts floating around hurting your bottom number. We've all seen the commercials and it's true: sites such as Credit Karma and WalletHub are absolutely free and user friendly, so you can check your scores any time and as often as you like. 

We all know there's no stress like financial stress, so before the new year finds you, plan your work and work your plan. There may be a few bumps, back steps, and blunders along the way, but the important thing is to keep going. Also share your tips of success with others as well. Everyone's looking for a way to become more financially fit, so get your money game on the right track and share the wealth of your knowledge with someone who's also working on their path toward happily--financially--ever after! 


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