Well here we are, at the start of another New Year. This is always a time of reflection, a time to set goals, to get our lives back on track or to jump to that next level.
I was listening to the radio this week and the announcer was saying that one of the number one priorities for people as far as New Years Resolutions go is to focus on paying off debt. That doesn’t surprise me given the disturbing rise of debt per household and the increasing cost of living. Debt seems to have crept into many of our lives and it is like that unwanted guest that just won’t go away (that comment may, or may not, have been directed to a friend of mine who KNOWS what I am talking about *wink, wink*), it just quietly creeps up and takes over your spending plan, or a chunk of your disposable income at least.
I’m not much for New Years Resolutions. A few years ago I adopted the concept of a New Years Theme. You pick a theme, could be ‘healthy living’, ‘ happy finances’, ‘quality time with family & friends’, etc. and you have some objectives that you commit to that support your theme. For example, if ‘healthy living’ is your theme, perhaps you cut out junk food, or research cleanses. If ‘happy finances’ is your theme, I can help and offer the following 10 tips to help you on your journey:
Get organized! ~ Have a place for all of your financial stuff – bills, bank statements, etc. Whether it is on the computer, your phone or in paper files is irrelevant, if you can’t find stuff it is difficult to stay on track. Choose a place and make a list of the financial commitments you have: monthly payments (ie. rent/mortgage, power, phone, cable, car insurance, etc.), irregular payments (gifts – yes! that includes Christmas, car repairs, vet/pet costs, etc.). Vow to keep records this year so you can accurately figure out where your money is going.
- Track your expenses ~ Oh come on, you had to see that one coming 🙂 … if there is one thing I recommend over and over and over and over (ok, I can be a bit passionate about things that I think matter), this is the one. You cannot, I repeat, cannot, come up with any viable plan if you do not know where your money is going. Find a system that works for you – pen and paper works just fine, online banking, accounting and money programs, an app on your smartphone. Doesn’t matter what you do as long as it works for you.
- Plan for irregular (occasional) expenses ~ Figure out how you are going to manage those expenses that pop up and bite you in the you-know-what. You know the ones I mean…we just survived the biggest one, Christmas. It comes once a year and we tend to spend too much in too short a time OR (shudder) use credit and pay for it long after the holidays are over. Second runner up would have to be Car and Home Repairs/Maintenance. If you have a car or a home (or kids or pets for that matter), you have (un)expected costs. We say unexpected but really…are they unexpected? No. We know they are coming. Just not always how much and when. Figure out what you have throughout the year and make some plans – put money away each month, start a savings bond at work, buy a gift a month, save your points and cash back throughout the year, etc.
- Don’t deny your urges ~ Not all of them anyway. If you leave nothing to spend on yourself, you will feel deprived, frustrated and tend to binge spend more. It makes much more sense to allow yourself some spending money per pay. Make it relevant to what you can handle. It could be $20 per pay or $200 per pay, the amount has to be reasonable given your circumstances.
- Tighten your grip on your credit cards ~ Start with a realty check. List your credit cards and Lines of credit, then your interest rate, then your minimum monthly payment, then how much of that is going to interest payments, pause, cry, wipe your eyes and figure out how you are going to get yourself our of this mess. Remember, debt is like weight, it comes on fast, and comes off slow. It will take time to eliminate it, but you can take some quick steps to start the ball rolling. Knowing what your interest rates are will help. You can explore options like paying off the card with the lowest balance first (debt snowballing) or paying off the one with the lowest interest rate. Research which option is best for your. This only works when you get a sense of where your money is going and set a goal to spend less than you make. (Related post: Do I pay off my high-interest card or low-balance card first?)
- Put your kids (spouse/self) on an allowance ~ If there is on thing that throws off a spending plan it is the unknown spending factor of other family members. Instead of giving into the “I want/I need” requests of kids, spouses and let’s face it, yourself (see Number 4 above), set an amount for each family member. That’s what you have to spend. Once it’s gone, it’s gone, you have to wait to the next payday or month.
- Turn your clutter into cash ~ Out with the old, in with the new. Time to purge (that’s a BIG New Years Resolution isn’t it?), set up three boxes in your home, the first is for stuff to sell, the second is for stuff to give away and the third is for stuff to chuck (arguably this could be a trash can). Consider selling items on Kijiji, your local Facebook community buy/sell group, Craigslist or a local consignment shop. For those items not worth selling, donate them to your local church or drop them off at a charity bin. Giving also opens up the door to receiving. 🙂
- Consult an expert ~ You don’t know what you don’t know. It’s admirable that you want to get things back on track all by your self, but maybe there is something you are missing that will help you put a better plan in place. Talk to a Financial Advisor, have an Insurance Expert review your insurance coverage, a Loans officer review your loans or a Financial Counsellor help you set up a spending plan. Most of these are available at no cost to you. You might be surprised at what others can offer to help you move forward more quickly and less painfully.
- Stop Beating yourself up! ~ If there is one thing we are good at, it is beating ourselves up verbally over and over again for the choices (mistakes?) we make. All that accomplishes is keeping you stuck in the cycle. Self-forgiveness (acceptance) is the key to changing a situation. Recognize what you did in the past, strive to make better choices, accept that you WILL mess up again on occasion, recognize it, change it, move on. Lather, rinse and repeat. Or in this case, Mess up, forgive and move on. :0)
- Adopt a new mantra ~ Instead of the typical ones we adopt such as “I am so stupid” or, “My finances will never be better”, try something else on for size. If you are not comfortable with “I am wealthy beyond belief” or some other variation of the positive affirmation, try “My finances are improving everyday” or “I am taking steps to make my financial future brighter”. Every time you do find you are beating yourself up, switch your vocabulary to your new statement. Over time, this re-conditions your beliefs to bring you more of what you want and less of what you don’t want.
Here’s wishing you a wonderful 2016!
Mary Ann Marriott
aka Dr. Debt