Wednesday, January 12, 2011

Be Accomplished!

My last post listed some ways to get started on organizing your financial information. If you've done those things already, bravo! Here are some additional goals to set your site on when you're doing your financial planning for the year:

Pay Down Debt
Did you go all out with your Holiday shopping this past year? Are you dreading that credit card bill? That's only one of the many ways some of us end up in debt. While we can't undo what had already happened, we can certainly make it less painful. If you're in debt, chances are you're paying more in interest that your bank is paying you. Sure, the funds you invest in may earn you more, but it's not guaranteed. Moreover, some credit cards have interest rates above 20%.

Create An Emergency Fund
Keep a pot of liquid asset to provide youself with enough money to survive in emergency situations. This will help you avoid getting into debt, in case, for example, you lose your job, get sick, or maybe need to fix your car. Some say 3-6 months, but in today's job market along with seemingly rising fuel and commodity cost, I recommend saving enough for 6-12 months just to be safe. If you don't seem to ever have any money left at the end of the month to save, read this next topic, hopefully it'll help.

Start Paying Yourself
No, I don't mean hacking into your company's accounting system and add a few bucks to your own paycheck. That's terrible and illegal, so please don't do that! What I mean to say is: set up your account so part of your paycheck goes straight to a savings vehicle (a savings account, 401K, IRA, etc.). This way, you can pretend you've never had it. You'll learn to manage without it. Start with 10% of your pay and your savings will increase as your salary increases. Maybe eventually, you can even raise it to 15%.

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