Monday, December 31, 2007

Financial Resolutions

Financial Resolutions by Gary Foreman
Simple steps to a brighter financial future

This is the time of year when many people take stock of themselves and their future. So alongside your plan for a trimmer waistline, we'd like to suggest some financial
resolutions for the new year.

Resolve to save at least $1 each day. It doesn't seem like much, but it does add up faster than you might think. You've probably seen the numbers before. Let's assume that you earned 10% per year on your savings. That's the long-term average for the stock market.

At the end of 10 years, you'll have nearly $5,000. After 20 years, you will have accumulated over $20,900. If you start at age 30 and keep it up until you're 65, your measly $1 a day will have grown to $99,000!

So how will you save $1 a day? How about bringing soda to work instead of hitting the vending machines at break time? Or skip the "supersize" at lunch. If you can't think of something, ask your friends or family for their ideas.

Maybe you'd rather do the whole week at one time. How about staying in for lunch one day a week? Carpool twice a week with a neighbor? You get the idea. Anything that'll help you save $1 a day or $365 a year will work. Certainly there's somewhere in your expenses that can be squeezed that much.

Resolve that your credit card debt will not increase in any month this year. A comic once said that the first key to getting out of a hole is to quit digging. It may not be funny, but it is true.

To keep your card balances from increasing, you'll need to pay off any new charges you make each month and also pay any interest caused by your old balance. For some people that will be tough. They see no connection between using a credit card
and paying it off. They think that paying the minimum each month is a major victory. It isn't.

Keeping this resolution will require you to keep track of your credit card spending and to stop spending when you run out of money.

Roughly one third of all credit card users carry a zero balance. While you might not be able to achieve that goal this year (wouldn't it be nice if you could!), you can manage to keep your financial hole from getting any deeper.

The next resolution will help you achieve the last one. Resolve to consider alternatives before making any purchase of $100 or more. Over the last 30 years, the size of the average home has grown by 50%. And, self-storage locations are a fixture in most towns. The reason for this is simple. We buy too much stuff and then have to store it.

The concept is simple. Before making any major purchase wait a couple of days. Use the time to think about ways you could get the benefit without spending the money.

Do you really need a new fertilizer spreader? Couldn't you borrow one from your next door neighbor? Rent one? Or even buy one used?

Often going to the store and pulling out the plastic is not the best way to achieve your goal. But you'll never know unless you think about alternatives first.

Resolve to have a proper will and estate plan. No one likes to think about their death. But, everyone should legally prepare for it even if you're young, single and don't have any children. If the unexpected happens, someone will need to step in and make decisions about your funeral and take care of closing out checking accounts, IRAs and selling your car and other possessions.

Everyone should have a will. And, many will want to have a "living will" to state their preference on being kept alive using life support equipment. It's wise to also have a plan in place in case you're incapacitated.

These documents aren't as expensive as you might think. And, in most cases, they'll work fine for many years. Take the time this year to put the proper legal papers in place in case something happens. Your loved ones will already be dealing with grief. Don't make them deal with legal complexities, too.

Finally, resolve to learn one new money-saving tip each month this year and put it into practice. There are literally thousands of ways to save money. You really don't have to look very hard or very far to find good ideas. It's simply a matter of making up your mind that saving money is important to you and you're willing to put forth a little effort to accomplish your goal.

Try one new money-saving idea each month. You might just find that you end the year in much better shape than you entered it. Isn't that what resolutions are all about?

Gary Foreman is a former financial planner who currently edits The Dollar website and newsletters. You'll find hundreds of articles to stretch your day and your dollar. Visit today!

Take the Next Step:
Decide today to try one new money-saving idea each month in the coming year. Hopefully, next year at this time, you'll look back and find that you're in much better financial shape.

Note from Lucy: I know that the best way to get yourself out of debt is to make a committment to do it. Start small and work your way up as you dicipline yourself to do it. Last year my goal was not to charge anything that I could not pay off at the end of the month. I've kept that goal and plan to do it again this year. They only thing that I charged that I could not pay off immediatelty was my freezer and dishwasher. Home Depot offered a one year no interest/no payment deal. I knew that I could get things payed off during that time period and went with it. By paying it off before the due date I will not have to pay any interest. If I don't pay it off before then, I will have to pay accumulated interest at 21 percent. I WILL have it paid off before the year period. Always read the fine print.

Have a Happy New Year everyone!


At 12:26 PM, Blogger Big Dave T said...

So . . . do you have a fertilizer spreader that I can borrow?

Those are all common sense ideas, but it's amazing how many people don't have common sense these days. We are part of the one-third that do not carry a credit card debt. And this year I hope to be totally debt free--no mortgage, no car payment, etc.

BTW, responding to your comment on my blog, yes, I know the Jewish do not celebrate Christmas. That was kind of the message of my blog. Christmas is such a part of our culture, we don't realize that there are some parts of the world where it's a minor holiday if a holiday at all.

At 12:41 PM, Blogger OldOldLady Of The Hills said...

Yeah! Some great advice...Especially the "bargain" stuff...If it sounds too good to be true, it probzbly is---nd that's why the "fine print" IS so very important....Like these many offers one receives for Credit Cards, etc.....The itty bitty fine print will tell you just how NOT Wonderful the deal really is!

A Very Very Happy New Year, Lucy....May 2008 bring ALL good things to you and to ALL those you love and care about!

At 8:39 PM, Blogger Rachel said...

Very good advice Lucy!! You are so right about all of this!

Happy New Year to you and your family Lucy!!

At 9:28 PM, Blogger Mountain Mama said...

I agree with the rest, it is good advice. I also made myself a promise to never own a credit card. I save for what I need/want and pay cash. I'm almost 69 and it's still working.
Yes it does feel good to be debt free.

At 2:58 PM, Blogger T. F. Stern said...

Big Dave T,

Are you sure you want the spreader or would a pair of brown shoes do?

We work very hard at not going into debt and that means we sleep better at night. I worry about some of our friends and the huge burden they carry; sometimes only being able to pay the interest on their credit cards so as to never get rid of the real balance.

At 7:45 PM, Blogger Diane J. said...

Happy, healthy, prosperous and blessed New Year to you and yours, Lucy! ;o)

Love and hugs,


At 6:00 PM, Blogger OldOldLady Of The Hills said...

So glad you liked the Bees...Indeed, these are some pictures I took a few months ago---(I thought I said
Anyway....I LOVE All the bees that come and enjoy the many flowers that are here in my garden...throughout the year. Right now, there is nothing blooming right outside my house that has as yet, brought the bees to me, once again, but I am sure within a few weeks or months...There will be!

At 7:24 PM, Blogger butterflygirl said...

I'm thinking I can definitely do this. Thanks!

At 8:06 PM, Blogger Cliff said...

Hey Lucy, you're preaching to a guy who just had a tranny rebuild on a business van with 198K miles on it. I'm thinking that I only need to get another 6 months out of it before it goes belly up and who know it might go 2 more years.
Thanks for the visit. It's 36 years of wedded bliss for me and precious moments too.

At 10:20 PM, Blogger Danny Sims said...

Blessings in the new year, Lucy!

This is a great post. We've taken advnatge of the "no interets" deals... But as you say we've paid them off before taking the hit. For financially responsible people these are great deals.

At 5:24 AM, Blogger LZ Blogger said...

Lucy - I have figured out a way to save $3.50 every day! (actually it is pretty simple) Starbucks has taken their Egg Nog Lattes off the menu until next Christmas! ~ jb///

At 9:01 AM, Blogger Merle said...

Hi Lucy ~~ Great advice and it is amazing how savings grow, if only the young ones would get into the habit of saving. It is wonderful not to owe
anything to anyone and still live comfortably. Thanks for your comments, glad you like the family pictures etc. Take care, Love, Merle.

At 3:14 PM, Blogger Oh great One said...

I love no interest deals. You're right though you gotta get paid by the cut off or you'll get hit with all that interest anyway!

At 12:26 AM, Blogger Jim said...

Hi Lucy -- I thought I had left a comment here the other day but I guess not. Thank you for the BDay greeting for Mrs. Jim. She doesn't blog, once in a while she read's our Granddaughter's. And she is my 'straight keeper.'

Your advice is good. I did a lot of that but would probably be rich if I had followed all of it.

I do buy used cars with low mileage, and keep them for a long, long, time. The one we have now has 161 thousand miles on it. Our four previous cars had well over 160K also. All used too, just a few years old.
In fact we have not had a NEW car in our 34 years of married life.

After my first divorce I got all the credit cards paid off (finally) and have never kept a credit card balance since.

Starbucks has never had any of my money except for two half-price coffee mugs one year.

Etc, etc.

Happy New Year, I enjoy your 'frugal' stuff.

At 7:20 PM, Blogger Michelle said...

Excellent advice! Happy New Year Lucy :o)

At 9:35 PM, Blogger Jen said...

Lots of info in this post! We are working to spend less & save more & find happiness in life rather than in things...

At 10:03 PM, Anonymous Anonymous said...

Thanks for the info!

Also, thanks for stopping by Modern Molly Mormon!

At 9:03 AM, Blogger Leslie said...

Good idea.

I quit smoking.


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