Taking control of your finances is extremely liberating. This is the time of the year when people set financial goals for the year. Here are some of the more popular financial resolutions and some tips for meeting your goal.
Common Financial Resolutions (And How to Achieve Them)
Save More Money
If your goal is to save more money this year, there are a couple of ways to make sure you are successful. First, make savings automatic. Go ahead and set part of your paycheck to be deposited straight into a savings account. It is also helpful to set manageable goal. It might not be reasonable for you to save up $5000 a year, depending on your situation. If you save just $20 a week, you’d have over a thousand dollars saved up at the end of the year.
Beat Down Debt
First, make a list of all your debt, including the balances and interest rates. After that, decide how you want to tackle the debt. You could try to pay off the debt that has the highest interest rate first. This is called the debt-avalanche method. Some suggest you pay off the debts with the lowest balance first, then after that debt is paid you throw all of the money you were paying toward the lowest balance debt to the next lowest balance debt, and work your way up to the larger debts. This is called the debt snowball method. When using either of these methods, check with each company or lender to make sure these payments will be applied to the principal.
I am a big fan of budgeting. So many people do not know what they spend their money on. First, figure out exactly how much money you bring in every month. Then, figure out exactly how much you spend. You will probably need to track your spending closely for several months. I recommend an online budgeting tool such as mint.com for assistance. After you figure out what you are spending your money on, you will probably be able to easily see things you should cut back on.
When it comes to spending less, some have had good success with the envelope system. In the envelope system, you withdraw cash for however much you want to spend in an area, say groceries for example, and put that cash in an envelope. When you go grocery shopping, you spend out of the cash in your envelope. When you run out of money in the envelope, you’re done with spending on groceries for the month. This can provide a good visual as to dividing up an amount of money throughout the month.
If you can’t find your way out of debt to begin your financial goals, please contact one of our offices to set up a free consultation with an attorney. Filing for bankruptcy might be the kick start you need to get on your way to make your financial resolutions a reality.
Kathryn Davis is an attorney at the Bond & Botes Law Offices in Huntsville and Decatur, Alabama. She holds a Bachelor of Arts from Auburn University, and a Juris Doctorate from Samford University, Cumberland School of Law. She is passionate about utilizing the bankruptcy process to help clients navigate through what is usually some of the lowest points in their lives. Read her full bio here.