MyMoneyMinute.com

The holiday season is over and New Year’s has come and gone. It’s time to look ahead, now, to the year that is laid out before us: 2012. For many people, this means making resolutions to which they hope to adhere throughout the year. People resolve to lose weight, spend more time with their families, travel to someplace new, find and better job, and to be a better friend, sibling, or spouse. The list of possibilities goes on and on.

While all these resolutions are certainly valid ones, there is another that you may want to keep in mind: a resolution to better manage your finances in the upcoming year. This commitment can be further broken down into several smaller resolutions, such as those related specifically to investments, savings, spending, and budgeting. A resolution in any of these areas is probably a beneficial one to make.

Before you make a financial resolution, however, it’s important to keep certain considerations in mind and ask yourself several questions:

-How would you label your financial situation? Are you secure? Content? Satisfied with your investments? If yes, you may want to make a budget that attempts to simulate your earnings, spending, and investments from last year. If not, you should identify areas of potential improvement and resolve to change them.

-Are any major events happening in your life this year? If yes, how do they stand to impact your finances? These events could be anything from a new job to a new car to a child going away to college. Almost every major personal event will have some sort of impact on your money. On that note, it is important to plan ahead. If you plan to get a new car, for example, now is a good time to start finding cheap insurance quotes and adjusting your financial resolutions accordingly.

-Do you have balance in your financial life? Do you save too much or too little for retirement? Do you spend too much or too little on something like food or clothing? As with everything else in life, having a financial balance is crucial for your monetary security. It probably also can contribute to your happiness and well being.

These are the major and most basic questions to ask yourself before making any finance-related New Year’s resolutions. The year ahead of us is full of promise and opportunity, but it is important that we go into it with a plan and a sense of purpose on even a purely financial level.

Guest Post 2012, investment, new years resolutions, resolutions

Face it — we’ve all made goals

Lose 10lbs (or 20.. or a lil’ more, LOL), get that degree, read a book, or even get through a Bible study series.  To achieve your goal, it is a great idea to break that goal up into incremental steps & check up on your progress frequently.  I was listening to a Zig Ziglar tape last night, and he was telling the story of how he decided to lose 37lbs. in 10 months.  So he broke it down — 3.7lbs. per month; less than a pound/week; in fact he even broke it down to 1.9 ounces/day!  While 37lbs. seems insurmountable, 1.9 ounces each day certainly seemed attainable.  He also would check back periodically to see how his progress was coming along.

If you want to finish that degree, break it up — semester by semester, class by class, hour by hour of class & study time if need be.  If you want to read a book by a certain date, do a chapter break-down and allocate time accordingly.

Likewise, your finances are no different.  Perhaps I should’ve come across Ziglar’s advice earlier this year, and I could’ve broken down goals into monthly morsels.  But, what I can do, is take a look back and review our progress from our New Year’s Financial Resolutions.  We are now 3/4 of the way through 2009, so it’s a good time to venture back and see how we’ve been doing with our goals, and if/how they’ve changed.

Original 2009 Financial Resolutions

1.  Pay off H’s Car Loan

YES! The car was paid off early this year, as detailed in my post, “Don’t Laugh, It’s Paid For!” We’re relieved the consumer debt is gone, hopefully for good.  Now we can put all our effort and focus into the student loans.

2.  Pay off My Bar Study Loan

Balance-wise, it is a very small educational loan.  But we want to just pay it off to use the extra $50/month to add to our snowball!  Plan is to have done by February as well.

YES! We were also able to do this early on this year.  Like I said in my original New Year’s Resolutions post, it was a smaller balance, and we were able to take the minimum payment of $50/month or so and “snowball” (apply) it to our next student loan balance.

3.  Establish a “tweener” Emergency Fund

If you are extremely focused and intent on paying off your debt in an 18-24 month period, Dave Ramsey recommends a “baby” Emergency Fund of $1,000 to protect you from falling off the wagon back into credit card debt.  Once this is paid off, you then fully fund your Emergency Fund with 3 to 6 months expenses.

Since our student loans are a little more long-term than the consumer debt we have paid off, we want to establish a “tweener” Emergency Fund of $10,000 by July.  This would give us a little more cushion so we can begin to attack & pay down our student loans.

4.  Pay off H’s Parent Plus Loan from College

A moderately-sized loan in our world, we took this loan back over from H’s parents after getting jobs.  We just thought it was the right thing to do.  We believe it is attainable to knock this out in the 2nd half of the year, and have it paid off by December.

5.  Begin saving for future car

YES! NO! uh.. SORT-OF! Here’s the deal.  After paying off Resolution #2, we continued to snowball our monthly payments, but stopped adding any surplus money to our debts at the end of each month.  Rather, we attempted to pile up money for any number of life possibilities that we expect could happen:

• Emergencies — We wanted to have money available as our “Tweener Emergency Fund” in case life happened.
  
• Gaps in employment — Because I do project-based work, we wanted to bank up money in the event I was unemployed for a lengthy amount of time.  Good thing we did.  I spent 7 weeks off this summer between projects!  It really helped to have a little money set aside — it saved our budget and our sanity.
  
• Buying a new car — I have nearly 193,000 miles on my 2000 Nissan Maxima.  I hope the thing runs for quite a while, but we want to bank away some money in case the inevitable happens — the car blows up on me and we need to buy another car.
  
• Having children — This is a reality for most young marrieds, and one that’s probably closer to reality than not at this point.  We wanted to bank money away in case my wife had medical complications, or needs to take extended time off work.

So as you see, we were able to reach the goal of a “Tweener” fund, but the slow economy caught up to me and my project work, which in-turn slowed down the money pile.

There’s still hope of achieving all these goals, although paying off H’s Parent Plus loan will probably be shifted ahead until sometime next year.

Do you have financial, health, or other goals that you’ve made? What’s your progress looking like??

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photo by frli

Personal Finance goals, new year, new years resolutions, resolutions