Sorry in advance if my blog entries this week seem a little short or are late in coming or if they seem a little bit scattered. This is finals week, and so my brain is stuck on Spanish, Hitler, Astronomy and dark germination.
Last week I mentioned figuring out where you spend your money. Once you have that figured out, you should have also figured out how to cut out some of that extra spending. Now you need to set yourself some goals. These need to be realistic goals. Like with losing weight, if you set your goals too high too soon, you are more likely to fail because it's too much. So set minor goals. I know you want to save for retirement and for your children's college and you want to save for that brand new car, etc. But start with an emergency fund. Save enough for you to survive on for 6 months. So if you could survive on $3000 in 6 months, then save that amount of money first. That's a finite amount. Much easier to save when you have a finite amount. OR maybe you want to pay off your car. So figure if you could afford a double monthly payment, and have the extra money go towards principle so you can pay less interest in the end. That will free up more money per month that you can save towards your emergency fund, or towards your retirement, etc. Can you afford to add an additional $50 per month toward your car and save $100 per month toward your emergency fund? Once you have a goal in mind, figure out how long it is going to be before you can achieve it. Once that one goal is met, work towards another one. One thing I will say is, try to minimize your credit card debt as soon as possible. If you can consolidate it onto one card, do so. Put it on the card with the least amount of interest and pay it off as quickly as possible. Never pay credit cards with the minimum payment, as this takes a VERY long time. Pay them off monthly if possible. And if not, look at paying them off before any other debt. Unless you have very little in another bill. For instance, your CC debt is $10,000 and your car note is only $2000, pay off the car, and use the car payment toward your CC debt. So that you can pay it off faster. The less debt you have, the more you can save in the end and the less that actually comes out of your pocket when it is all said and done. So first you figure out how you are spending money, then you figure out where you can cut money. Then you pay down your existing debt as quickly as you can comfortably manage and start saving with the finite accounts first. Eventually you'll be able to open an IRA for your retirement and open savings accounts for your children's education. Next week I'll talk more about living beneath your means and making sensible purchases.