For the first time ever I have sat down and seriously thought about what my resolutions are going to be for 2013.
My main premise is that 2013 is going to be my financial year and by that I mean that I am going to put in place a number of strategies to put me on the path to no debt and building financial wealth.
Here are some of the strategies I am going to use which you might find helpful.
Get rid of credit cards and loans
I actually paid off all credit cards and shut them down this year, but I still have a niggling personal loan sitting there. On numerous occasions it has been at $0 balance but it has been all too easy to rack up more debt on it. So my number one priority is to pay that sucker off and shut it down!
The easiest way to avoid debt on credit cards and loans is simply to not have one. This is especially important for those of you who struggle to budget and pay off debt. If you have struggled with paying your debt off in the past you might want to consider The Debt Snowball Plan by Dave Ramsay.
In this approach you should be tackling the smallest debt first and then move up the ladder. Every amount you had to pay to the smallest one should be added onto the next one. This gives you some quick wins which will keep you on track with your debt minimisation.
Start building your cash stash
One of the most important things you could do is to have an emergency fund and if you don’t have one yet it should be one of your 2013 priorities.
Whilst people vary on how much should be in this cash stash, most agree on a figure of around 3-6 months’ worth of living expenses. This is to ensure if an emergency occurs where you need quick access for funds, you do not need to go into debt to pay for it.
And don’t think that emergencies will not happen-illness, natural disasters even losing your job will affect everyone at some point of their life-you only have to turn on the news to see. You should also have a cash stash for voluntary life changes such as changing jobs or career. Creating peace of mind is important for stress free living.
Give up your vices
We all have some type of vice which is gobbling up our money. Yours may be so bad that it is spiralling you into more and more debt.
What comes to mind is a friend of mine who has a weakness for designer clothes and this year alone has racked up $20,000 in credit card debt to fund it.
Start thinking about your vices and dedicate to yourself to give up 2 of them in the New Year. All the extra money you save from it can be used to pay off your debt or build your cash stash.
Pay more than the minimum
Whether it is a credit card or a home loan, pay more than the minimum. This could potentially save you hundreds or thousands of dollars in interest and get you to be debt free quicker.
Take advantage of the interest rate decreases by keeping your minimum repayments on your home loan at the level they were before. Even small amounts could shave years off your mortgage.
Boost your super
You will have heard all the media hype over the last couple of years about the importance of your superannuation. With an ageing population, more and more people are going to need to rely on their super balances to fund their retirement. Don’t leave it till you are a year off retirement, start doing it now.
There are a variety of methods which could potentially benefit you by putting more in now. Look at salary sacrificing a small percentage of your income which could reduce your tax bracket and actually put more money in your pocket. Also take advantage of the Government co-contribution scheme. Whilst the amount may be reducing this year, it is free money.
This is one thing which I have never done before but is one priority I am going to follow through on.
Start thinking about investments
Most financial experts will stress the importance of not having all your eggs in one basket especially since the economic climate is still somewhat shaky. Think about ways to diversify your portfolio by type and length of time.
For myself, this year I want to build on my somewhat small share portfolio which has the potential to maximise my wealth. For less knowledgeable investors it is probably better to focus on blue chip shares in a longer term investment strategy.
Get focused and start making a plan for the New Year. If you can work out now what you are going to do you probably have a better chance of getting into gear and sticking to it.
Whether your plan involves being debt free by the end of 2013, or building your nest egg it doesn’t matter. You just need to be dedicated and see it out. Seek financial advice in early January to find out which strategy is best for you and your family.
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Alex Wilson is the founder and editor of Savings Guide, Australia’s number one saving money website. For regular money saving tips, visit Savings Guide or follow Savings Guide on Facebook. |