What are your New Year’s financial goals for 2015?
Sometimes, a decision that starts as New Year’s financial goals can end in a dream come true when you let those goals become a new way of life.
Our family did this to get out of debt, pay cash for our cars and save for a dream vacation.
The first goal was huge: paying down our $40,000 in consumer debt, but we did it in only 2.5 years. The second goal was met within four years by buying a used car, paying cash and keeping it for several more years. The last goal was met when we went to Hawaii without the kids!
Your New Year’s financial goals can come true if you will develop an appropriate plan and stick to it.
Resolution: Pay off Consumer Debt
An excessive amount of consumer debt usually means a lower credit score (FICO), which means higher annual percentage rates (APRs) on existing credit cards and higher interest rates on your cars and mortgage.
By improving your FICO, you can lower the APRs and thus pay off that debt in a fraction of the time.
It’s easy to improve your FICO by following three simple steps:
Step 1: Pay on Time
A late payment mean high late fees and part of your score is determined by payment history. Set up automatic payments with each card to make sure you’re never late again.
Step 2: Pay in Balance
Utilization, which is the ratio of debt to available credit, is important.
For example, if your card has a limit of $5,000 and you have $2,500 charged, your ratio is 50%. Adjust the balances on your cards to make sure each has no more than a 50% ratio.
Step 3: Pay it Down!
Pay as little as $5 to $10 more than your minimum credit card payment. It shows lenders that you’re trying to “pay down” your debt. Tweet this
Concentrate on improving your FICO and utilize an accelerated debt payoff calculator. This will help personalize a plan to pay off your consumer debt so this resolution can become reality!
Resolution: Pay Cash for Your Cars
The least expensive car you can own is the paid for car that you currently drive. Use an automobile affordability calculator to see how much you need to save each month in order to pay cash for a newer car.
It’s a lot easier than you think.
Once you’ve paid off your current car, don’t trade it in, but keep making payments to yourself in the amount of the former loan.
So let’s say you put $350 per month into a car fund and invest it in a fund that makes 5% annually. You would have around $4,400 at the end of the year, plus the value of your existing car (let’s estimate $5,000) to put almost $10,000 down on a newer car than you now own.
Keep paying yourself each month for another two years, driving your newer car and at the end of those two years, you’ll have $8,800 plus around $9,000 ($10,000 minus depreciation) for a total of $17,800 to put into a newer car.
We did this until we were able to afford a two-year-old Mercedes.
If you keep saving and trading up, you’ll be able to pay cash for your cars for the rest of your life! Tweet this
In the first 15years of our marriage, on one (military man’s) income, we bought 11 cars this way, paying cash and even donated some of those used cars to charity!
Resolution: Pay for that Dream Vacation
Hawaii was my dream assignment for many years when my hubby was in the military—but it never happened!
Rather than waiting for Uncle Sam to make that destination come true, we resolved to save enough to pay cash for a dream vacation.
Using a savings goal calculator, enter the amount of money needed for your goal, then the calculator will run several options. It will tell you how much to save each month and how long it will take to realize the goal.
But how do you save money when you can barely pay the bills?
Many families make a New Year’s resolution to save more money every year, but they often fall short by buying into the misconception that saving money takes too much time.
The reality is that a little time and patience can save hundreds or even thousands of dollars each year. Tweet this
In fact, many of the best ways to save only require an investment of 10 minutes or less.
Wise shoppers can save hundreds of dollars each year in minimal time by simply doing their homework.
Here are just two of the many ways to save in 10 minutes or less:
For higher priced items, go to the online site of your favorite store. Get the best online price, print out the price page and take it to your local store to match the better price.
If they cannot match the better online price, then you are free to order online.
Ask for substitutions and rain checks
Many stores will substitute other items of equal or greater value on out-of-stock sale items.
Several months ago, a digital camera was originally priced at $139 and on sale for $99. The retailer was out of the featured item and substituted an upgraded model—which cost $189!
The next time you order pizza, ask what the specials or coupon values are for the week.
Three out of four pizza shops honor the coupon value just for the asking–even if you don’t have the coupons! You can save anywhere from 20% to 50% (on a buy one/get one free special.)
Do you set New Year’s financial goals?