3 Things Everyone Should Do Before the End of 2010

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New Year’s resolutions are great, but what are you doing the rest of the year?  As we roll into summer and we see the year’s halfway point approaching, it’s important to look at our goals and our progress and see if we’re on track for where we want to be in our lives.

Financially, now is the time to start preparing for the new year.  Don’t be like most people and  wait until December to think about it.

Here’s a place to start:

  • Max out your 401(k). If you are under 50 years old, your maximum annual contribution is $16,500.  If you haven’t contributed to your 401(k), yet, this means you will have to deposit $2358 per month to max it out.  If you would have started at the beginning of the year it would only be $1375 per month.  If those numbers are out of reach, at least contribute enough to get your employer’s match. If your company matches 50% of your contribution up to 5%, you need to be contributing 5%.  If your gross paycheck is $1000, you should contribute $50.  If you do so, your company will be giving you $25.  That’s free money and a 2.5% raise!   With a pre-tax contribution, you are also lowering your taxable wage, so the 5% contribution is not lowering your take-home pay by 5%.  In some cases, it may even raise your take-home pay!
  • Know your money. Take some time to examine your income and your expenses.   What are you having withheld?  Will that leave you with a large tax bill next spring?  Will it give you a huge tax refund, which is just an interest-free loan to the government? You withholding goal should be to pay nothing and receive nothing when you file your taxes in the spring.  The less you withhold, the more you have for your daily expenses, but, if you withhold too much, you risk an unaffordable tax bill and possible penalties later.  Look also at your expenses.  Have you used your gym membership in the last few months?  Cancel it. Do you know every cent you have to pay each month?  Figure it out so you can plan the rest of your financial year. A budget is helpful here.
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  • Own your debt. “It’s not my fault.” “My ex stole my bank account.” “My dog ate the bill.” “My kidneys were stolen and I woke up in a bathtub full of ice and an invoice for services rendered.” “I lost my job.” “I have an X-Box addiction.” “I gave my credit card to a stripper, but we broke up. Go after the stripper.”   Excuses.  Here’s the thing: None of it matters. You owe the debt.  Your choices are to pay the debt or file bankruptcy.   Either way, you need to own the debt and take responsibility for whatever choices you made or debt you’ve accumulated.   Denial is not a successful coping mechanism. Whatever you choose to do, know that it is your choice.  You can’t hide from your bills or your $15/day “Venti Soy Hazelnut Vanilla Cinnamon White Mocha with extra White Mocha and caramel” habit.

What are your financial plans for the rest of the year?

Update:  This post has been included in the Festival of Frugality.

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Resolutions That Don’t Suck

a beautiful macro shot of Crystal Methamphetam...

a beautiful macro shot of Crystal Methamphetamine in a black background (Photo credit: Wikipedia)

I’m not a huge fan of New Year’s resolutions.  Generally speaking, if you don’t have the willpower to do something any other time of the year, you probably won’t grow that willpower just because the last number on the calendar changed.

Seriously, if you’ve got something worth changing, change it right away, don’t wait for a special day.

That said, this is the time of the year that many people choose to try to improve…something.   Some people try to lose weight, other people quit shooting meth into their eyeballs, yet others(the ones I’m going to talk about) decide it’s time to get out of debt.

Now most people are going to throw out some huge and worthless goals like:

  • I need to lose some weight.
  • I need to save more.
  • I need to be a better person.
  • I need to shoot less meth into my eyeball.

The problem with goals like that is the definitions.  What is “some”, “more”, “better”, or “less”?  How do you know when you’ve won.

It’s better to take on smaller goals that have real definitions.

Try these:

  • I’m going to lose 20 pounds.
  • I’m going to save $1200.
  • I need to stop locking my children in the closet when I go to the movies.
  • I am never ever going to shoot meth into my eyeball again.

But Jason, I hear you saying, where am I going to find $1000 to save?  Well, Dear Reader, I’m glad you asked.  Next time though, could you ask in a way that others can hear so my wife doesn’t feel the need to call the nice men in the white coats again?

Let’s break that goal down even further.

Instead of saving $1200, let’s call it $100 per month.  That’s a bite-sized goal.  Some people don’t even have that to spare, so what can they do?

Let’s make that resolution something like “I’m going to have frozen pizza instead of my regular weekly delivery.”  If your house is anything like mine, that brings a $60 pizza bill down to $15 for some good frozen pizza for a savings of $45.  If you order pizza once a week, that’s $180 saved each month, double your goal.  That’s a win with very little suffering.

Now, you can take that extra $80 that you hadn’t even planned for and throw it at your credit cards.   That’s a free payment every month.  Before you know it, you’ll have your cards paid off and a decent savings account.

Then you can thank me because I made it all possible.

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Getting Back on Track

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Have you ever set a goal…and failed?

At some point, it happens to all of us.   After all, our reach should exceed our grasp, right?   That doesn’t make it easy to admit failure, or to correct it.   Did you let a New Year’s resolution lapse, or slip off of a diet?   Have you started shopping indiscriminately again, or stopped going to the gym?

It’s okay if you did, but it’s time to fix it.

How can you get back on track after failing a goal?

1.  Pick a day to start over.

Just like when you first started towards your goal, you have to decide when you’re going to get back on board.    If you can’t decide, just pick the beginning of the next month.   A new beginning is a great time to tackle your new beginning.

2.  Recommit.

You failed once.  Accept it and move on.  Past behaviors don’t have to be an indicator of future performance.   Just do better this time.

3.  Announce it.

Somebody has noticed that you aren’t on the wagon.   Your coworkers are seeing you eating candy, or your spouse has noticed you buying things you don’t need.  Talk to these people.  Tell them you’re going to redo the things you’ve undone.  You’ll change the world, but you have to start with yourself.

4.  Don’t be ashamed of your lapse.

Unless I have seriously misjudged my audience, you are human.  Humans sometimes make poor decisions.  Being ashamed won’t help you, but take the opportunity to learn from the past.  Do you know what caused you to fail?  Are there triggers to your behavior that you can avoid this time around?  When I quit smoking, I tried to avoid rush hour, because I smoked heavily while I drove and I wanted to avoid being in car for as long as possible, minimizing one of my triggers.   What cause your lapse, and can you avoid it?

5.  Don’t do it again.

This one should be the most obvious, but the fact that it’s a problem means it’s not.   Do whatever it takes to not make the same mistakes and uphold your goals.  Don’t smoke.  Don’t eat garbage.  Exercise more.  Whatever you’ve decided to do or not do, do it….or not.

Have you missed a goal?  How have you picked it back up?

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