New Year — New Finances
Posted by Richard on January 12, 2023
Were you better off last year than this year? If the answer is No, or you don’t know the answer, you’ve got some work to do.
A study by Princeton Research Associates shows that, for all income levels below $100,000, people who have a written financial plan report twice as much savings and investments as people without a plan. Here’s how to make yours:
1. Find where you are now:
– What is your net worth (what you own less how much you owe)?
– How much debt do you have? Take a brave look at debt and interest rates.
– What are your financial goals and how can you reach them?
2. Lower your interest rates.
If your job is secure and you are in good health, it could be wise to take a home equity loan at a lower interest rate to pay off high-interest consumer credit accounts. Rates on equity loans, though rising, are still less than credit cards.
3. Blast your debt.
Don’t charge anything. If you can’t pay all your unsecured debts in three to five years, talk to a credit counseling agency.
4. Check your progress.
You will be encouraged to see your total debt reduced each month.
5. Track daily expenses.
Monitor every penny you spend for 60 days. You are sure to find items you don’t really want or need.
6. Plan for disaster.
Check your home, auto and health insurance to be sure you have adequate coverage.
Put money into an account for emergencies. Aim for three months of living expenses, but save what you can.
7. Avoid temptation.
Stick to your plan, not your pal’s vacation schedule.