How to Get Your Finances in Order This Year

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By Wendy Stewart
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Money

It's the new year again and it's time to get your personal finances in order once again.

But this year you're going to get it done with these simple steps.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

pen and paper
bank statements
list of debt

Step 1

First thing: pay yourself first.

Many times we go into debt because we don't have the savings to cover what we need. So aim for saving 10% of your income so that you can have 3-6 months of living expenses. If things are so tight that you can't even get 10%, then start with 5% or even 1%. Just get into the habit of saving so that you can give yourself a much needed cushion.
Step 2

Next: pay off your debt.

I know this is easier said than done, but you know it needs to get done. As you pay off your debt you'll sleep better and have more money available to do what you want to do. Start with the debt with the lowest balance and pay in that order.
Step 3

Take an extra job or freelance.

This is to help you save more money and get your debt paid off quicker. Many Americans spend 125% of their income. Your goal is 80%. But you can't even get to 100% until you either spend less than you make, make more money, or both. So freelance, deliver pizza, deliver the newspaper. As long as its legal and moral!
Step 4

Shop around for insurance.

Make sure you are getting the best deals possible on your auto, home, life, health, and any other insurance you may possess. Remember to be sure your new insurance is in place before you cancel the old insurance. Shopping around for better rates will help you save money in the end.
Step 5

Play the grocery game.

If you haven't heard of it, The Grocery Game is a neat way to know when to purchase certain foods and household items to get the best discount. You will combine a shopping list with discount cards and coupons to get the best deals. See link below in the resource section.
Step 6

Start saving for Christmas and other gift-giving occasions.

Come on, you know exactly when Christmas is and when birthdays are. With that in mind, start saving now for an all cash Christmas. This way you can avoid the financial hangover many people are having right now.
Step 7

Get healthy.

If you need to quit smoking, lose a few pounds, get your cholesterol down, etc, now is a good time. As you become healthier, your costs for life and health insurance should go down because you are in need of less medication and you are likely to live longer. Not only that, but you'll be a healthier person and that is its own reward.
Step 8

If you buy a car, buy used.

New cars lose 20% of their value when you drive it off the lot. Avoid that by paying cash for your used car and doing the research to get the best deal from the dealer or private seller. Also, don't trade in your other vehicle -- you'll get more money by selling it yourself. Don't forget to shop on slow days and at the end of the month for better deals.
Step 9

Keep a spending diary.

This is often talked about in terms of weight loss, but the same principle applies. Keep track of everything you spend for 30 days. After 30 days, go back and review where your money is really going. By doing this, you will be able to see if there any money leaks (like too much eating out) and you can see where you can cut spending.
Step 10

Pay your bills on time.

This will save you money and headaches. You can pay online (provided there is not an extra fee), on the phone, and by mail. No matter how you pay, be sure that your payment is posted before the cut off time. Yes, some companies have a cut off time for your payment to be posted to your account. So if you are still mailing in payments, be sure to give it at least 2 weeks to post and for checks to clear. You can use your bank's online bill pay service, the service provided by the company, or a third party such as MyCheckfree.com (which is a free service). Using online services usually gets your payments posted faster and you'll avoid unnecessary late fees.

Comments

Glencap said

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on 1/14/2009 You've given us so many great suggestions on how to manage our finances. These are exactly the things that we all need to do; especially during this economic downturn. Thanks so much.