Jan 18, 2018

As we navigate the first month of 2018, let's focus on getting our financial houses in order.  The following are three great financial resolutions for the new year:

1.  Cut the waste.
Look at your finances and find out where you could be spending money unnecessarily.

Go through your credit card statements.  How many monthly subscription fees are you paying that you're not using?  I downloaded an app to my smart phone to help me learn Spanish before a trip to Mexico two years ago.  I didn't learn one lick of Spanish and I've been paying $21.79 every three months.  I just canceled that subscription.  Boom!  $87/year saved.

Take a look at your bank statements (or look at them online).  If your bank is charging you for the privilege of having a checking or savings account, find another bank!  I discovered I was paying $2.00/month for a "maintenance fee" for a savings account because I wasn't maintaining a certain minimum balance.  So I transferred cash from another account and now I'm saving $24/year.

Does your auto insurance or homeowner's insurance get more expensive every year?  Get a second opinion!  I have all my insurance through Maggie Merritt at Homer Smith Insurance.  She's the bomb and she always gets me a great deal.  Give Maggie a call at 360-385-3711 and see if she can save you some money.

Check out your credit card rewards program.  Some allow you to exchange rewards points for cash.  I just earned $225 for clicking a few buttons and transferring my rewards points to a checking account.  And most rewards expire after a period of time.  Use it or lose it!

Where else can you save money?  Are you paying for a land line you don't use?  Do you subscribe to Netflix and Hulu when one or the other will do?  Get creative!

A few bucks here and a few bucks there might not seem like much.  But as my Granny used to say, "pennies make dimes and dimes make dollars."

2.  Increase your retirement savings.
Do you have a 401(k) account through your employer?  Stop what you're doing right now and go contribute an additional 1% toward your 401(k).  I'll wait.

Take advantage of all the tax breaks available for retirement savings.  The contribution limit for employees who participate in 401(k), 403(b), government TSP, and most 457 plans is $18,500 in 2018.  If you're over age 50, you can contribute an additional $6,000 per year.

Contribute at least as much into your 401(k) as it takes to get any match your employer provides.  Then, allocate any extra money into an IRA and/or health savings account.

Prioritize saving and pay yourself first!

Financial services guru Shannon McLay recommends, "the best way to stay successful and continuously achieve this goal is to set up an automatic transfer from your checking account to your savings account for this amount every month.  If you need the money to pay bills, you can always transfer it back, but challenge yourself to live off of what's left after your automatic transfers happen."

3.  Create a debt plan.
Make 2018 the year to tackle your debt.  Figure out the total amount of debt that you have and your interest rates.  McLay cautions, "I'll warn you that this is a scary activity for many [people].  It's like stepping on the scale when you know you've had too much to eat; however, it's critical in creating your plan to get rid of it."

French Bulldog on a Scale

Personally, I like to use a spreadsheet to track debt and spending, but use whatever tool makes your skirt fly up.

Look for ways to consolidate debt or lower your interest rates through 0% balance transfer options, personal loans, or a refinance of your mortgage.  WARNING:  If you use your home's equity to pay off credit card debt and then you go rack up debt on those same credit cards again, I will personally come over to your house and beat you.  Don't do that.

Pick the repayment strategy that works for you.  Some folks like the snowball method where you pay the smallest debts first.  Other folks like the avalanche method where you pay the highest interest rate debt first.  Pick whatever method works best for you.

Then put yourself on a cash diet and leave your credit cards at home!