I have to say that financially, 2011 SUCKED.
There were some glimmer of good moments, only to be slapped in the face again by some catastrophe or another.
So I have high hopes for 2012. 2012 HAS to be better financially – it just HAS too.
My 2012 Resolutions
For me I have both personal and business resolutions, or goals rather since that sounds better that I’d like to achieve.
Like most people I have the usual goals of wanting to lose weight, save more money, be healthier and have a wonderfully fun family holiday to somewhere exotic.
To make these happen I know I need to get organised and make a plan. Just wanting these things to happen doesn’t work (oh god, I wish it would though).
So I got myself a cute pale pink notepad that includes a daily/weekly planner section so that I can mark out the smaller steps that I need to take to get me where I want to end up.
Not the colour though (you may choose whichever colour you like best).
But writing your resolutions (ahem, goals) down and planning out the smaller steps makes it much more likely that you are going to achieve them.
But I’m sure you knew that. Didn’t you?
Your Resolutions (Goals) for 2012
What you didn’t think this post was going to be completely about me did you?
Now I can’t help you with your goal to drop a dress size (but put down the chocolate éclair anyway).
But if one of your goals was to save more money, get your finances in shape and kick that debt to the curb then perhaps I can help out after all.
1. Get yourself a notepad / journal. A really pretty one. Unless you are a man reading this, which in that case means you can get a ‘manly’ one. Mine had a weekly planner section in it, but yours can be just plain paper, have little flowers in the corner or even be embossed with your initials if you afford it (and if you can – perhaps you don’t need to save money after all?)
2. Write in it. Sounds harder than it actually is, because sometimes I’ll buy a really pretty journal and not want to write in it because you don’t want to mess it up. But writing down your goals and then writing down the action steps to get there will make things real. Achievable. Actionable.
Ok, the easy stuff is done.
Main Goal: Get Your Finances In Order
Step 1: Set Up Your Emergency Fund
So your first step for getting your finances in order is set up your emergency account. You’ll need this to help pay for all those unexpected expenses that crop up during the year: repairs or new dishwasher when your old one floods the kitchen, car tyres if one gets flat, surgery for the cat etc etc. Things that are not expected but happen remarkably more often than you’d like.
You’ll need $2,000.
If you don’t have $2,000 to put in your emergency fund then write it into your journal as a goal to save up for.
And put the money in a separate savings account. Not your regular everyday account so you are not tempted to use it for new shoes (not an emergency – even if Ashton Kutcher asks you out).
Step 2: Set Up A Budget
Next is setting up a budget. I like simple budgets. Ones that you don’t have to think about – that you can set up and manage on autopilot. That way you’ll actually stick to it.
And my simple rules budget is just that – simple.
It basically breaks up your income into three sections.
1. Savings/Debt Payoff
3. Spending Money
In that order.
Cool. So the basics are in place. Now it’s time to make some real money this year.
Step 3: Pay Off Debts
I don’t recommend that you start saving money until you’ve paid off your debts. Specifically your credit and store cards, and any personal loans/car loans that you might have.
The only thing that’s exempt here is your mortgage. I don’t include that as bad debt. It’ll be nice to get the house paid off eventually – but that isn’t a pressing concern at this stage. But those credit cards are.
Every time you get paid you need to be using a portion of that money on paying off these debts.
In your notepad/journal write down every debt you have, how much is still owing on it and the interest rate on it.
Order them from lowest balance first to highest balance last.
That’s the order you are going to pay them off.
Paying off debts gives you huge motivation to continue to do so. So if you get to cross off one card, or one personal loan off your sheet it will be an amazing feeling. You’ll then want to go ahead and tackle the rest.
Sure many finance experts recommend that you start with the highest interest paying card first but while it makes sense to do this on paper (because you’ll save a few bucks in interest) – in reality it can be quite demotivating.
So choose the lowest balance first. Pay the most amount you can on that and just the minimum balance on the rest.
When its paid off put a big red line through that in your journal. And do a happy dance. Why? Because it’s fun and makes the kids laugh at you.
Paid off all your debts (except your house)?
Step 4: Set Up Your Savings Account
Now you can start saving, really saving, for all those awesome things that you want.
Make a list in your journal of all the cool things that you simply must have. You know things like big screen TV, Jimmy Choo shoes, DeLonghi cappuccino maker. The coooool stuff.
But you can’t just save up and spend it straight away then you’ll be back at the beginning again and that’s no fun.
No instead you are going to allocate 50% of your savings to buying those coooool things. And 50% of your savings to build your savings account.
Ideally you want to get your savings account to around $50,000. That’s a nice buffer to have.
Yeah it’ll take you a while, but think how good you’ll feel when you get there. After that you can start looking at more aggressive (and kind of fun) investments like stocks (if the current economy hasn’t scared you off).
So that’s it. Your goals for getting your finances in order:
1. Set up your emergency fund
2. Make a simple budget that you’ll actually use
3. Pay off Debts
4. Start Saving
Now there is plenty more you’ll need to know for getting uber rich, but these steps are simple and oh so effective and will get the ball rolling for a profitable future for you and your family in 2012 and beyond.
To a prosperous 2012!
If you want a jumpstart on saving money or getting out of debt then be like all the cool kids and do a 30 Day Spending Detox.
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Click here to find out more.