Hit the ground running for the New Year: Three goals for your finances
Is it us, or did we just put away our holiday decorations from last year? As the new year sneaks up, it’s a good time to reflect on your financial goals for next year. If you’re carrying debt, a little prep now will provide peace of mind when the new year officially starts.
Here are a few ways to get the most out of your money for the New Year:
Don’t spend more than you earn
This classic rule of personal finance is classic for a reason: it works. We all have good intentions when it comes to saving, but it’s easy to fall into the habit of using your credit card when you want to buy something but don’t have the cash.
Bottom line? If you don’t have it, don’t spend it. After paying your bills and putting money into your savings, make a discretionary budget (and stick to it!).
Create an action plan
If you’re trying to eliminate student loan debt or, say, buy a house, break your big goal down into smaller steps. Otherwise, you may get overwhelmed by the larger task and give up.
For example, rather than saying, “I’m going to pay off $50K in student loans this year!”, focus instead on eating at home more often, taking one less vacation, or picking up a part-time job—anything that will free up cash to help you meet your goal.
Smash debt with the snowball-payment method
If you’ve tried to pay off debt in the past and fell short, or finally want to get serious about it, Next year is your year! It’s time to try the snowball-payment method.
Start by identifying your most expensive credit card balance. Pay the minimum on your other cards, and roll the extra money into your payment for the expensive card. Once it’s paid off, focus on the next most expensive card, etc. You’ll save money by paying less in interest over time, and move yourself closer to being completely debt-free.