How to increase your financial fitness. Personal finance facts.
Americans have declared their top priorities are to loose weight and gain ground financially. Progress begins with the belief that what is necessary is possible. Today is the time to begin your six step debt diet.
Just like any diet plan or fitness plan, expect feel deprived, fall off the wagon and hit progress plateaus. It’s a reality. So, decide, now, that you’ll get right back up and start again if you stumble and fall during next weekend’s spending temptations.
Taking Six Steps Toward Greater Financial Fitness
1. Step One: Know where you stand. It’s the initial weigh in.
Think of this step as the initial weigh in for this financial fitness work. The avoiding the scale won’t change the facts.
Do you know exactly what you owe and how long it will take you to pay it off? If you have been paying the minimums on your credit cards in 2009, you’ve lost financial ground. Gather each of this month’s statements. Make an itemized list that includes each account’s balance and interest rates. Having your total financial obligations at your finger tips can help you make informed financial decisions.
2. Step Two: Make a consumption plan. Prioritize the spending calories.
Budgeting isn’t necessarily boring anymore. Fiscal fitness requires not over spending or “binging.” Your plan should apply the spending calories in these main groups.
- 35 percent on housing related expenses (mortgage, insurance, taxes, upkeep)
- 15 percent on transportation related expenses (car payment, gas, insurance, upkeep)
- 10 percent on savings
- 15 percent on debt repayment (including credit cards)
- 25 percent on running the rest of your life (utilities, food etc.)
3. Step Three: To stop spending sanely. Simply raise your spending awareness.
For many it is the wasted dimes and dollars rather than the major purchases that leave us financially strapped. Starting today, jot down every cent you spend for 30 days. Most people find they are spending more than they would have guessed on things they could easily live without – the impulse shopping at the grocery store and multiple daily stops at your favorite coffee shop.
4. Step Four: Repay Debts in order of their importance to your fitness future.
Set your debt priorities. Your house or car is a secured debt; missing payments here can cause either to be repossed. Check your interest rate on your car loan. It might be time to refinance. A visit to bankrate.com can also provide you with a list of average home mortgage interest
Regarding your credit card debt (unsecured debt) speak with customer service manager and request lower interest rate. Then work on paying off your highest interest rate cards, first.
Carrying a credit card balance costs you cash. If you have a $2,000 balance on a card that charges 18% interest, you blow $360 every year on interest that you could use better elsewhere.
Step Five: Super-Size Your Savings Habits. Shrink Spending.
Something as simple as saving loose change on a daily basis can end up being $800-$1,000 at year end. Set up your emergency fund and then start to invest. If you are age 35 today with little in savings, saving as little as $11 per day ($334 monthly) will bring your balance to $500,000 by age 65.
Several online banks now offer high yield savings accounts :Ingdirect.com and CharlesSchwab.com
6. Step Six: Earn More. Keep More.
It’s your money, so don’t over pay Uncle Sam. If you get a tax refund that means you're overpaying Uncle Sam from the beginning of the year and not earning the interest that you could easily gain with a high interest savings account. Boost your take-home pay today by adjusting your tax withholding on your W-4 form with your employer.
The average pay increase this year will be 2 percent. Use yours to pay down debt rather than increase life style. Pursue an entrepreneurial interest on a part-time basis. A good garage sale can net $1,000 or more.
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Margaret Ross, speaker and writer, grows and encourages people in business and in their lives. Ross is CEO of the Kamaron Institute, a leading management consulting, training, and market research communications firm. Margaret is the editor of Kamaron PI, the Positive Impact blog, host of Telly award winning Success Class and is a regularly featured guest on America’s top radio shows.
