Sunday, December 28, 2008

Financial New Years Resolutions

It is that time of year again where one year is ending and another about to begin. We reflect on the past year and make resolutions for the New Year. With the economy in recession and reports that it may get worse in 2009 this is a good time to think about how you are going to get your financial house in order. Hear are some good financial resolutions you can consider.

Pay down debt
If you have debt on credit cards with high interest rates pay them off first. Consider transferring credit card debt to a home equity loan for a better rate. You will also get a fixed payment for a fixed period of time. This makes people fell better because they know when they will be out of debt.

Pay cash for purchases
If you clear your credit card balances by putting it on a home equity loan don’t charge it back up. Many people feel so good about clearing off the credit card that they go out and use it. Even if you do not transfer the balance, get in the habit of only paying cash for purchases. This will force you to save for what you want. If you don’t have the money, don’t buy it. That leads us to our next resolution.

Live within your means
When credit was so easily available you could increase your living standard buy going into debt. Now with credit tightening we are being force to live within our means. People need to consider what certain purchases do to their long term financial situation. Buying a more expensive car by spreading the payments over 7 years so you can afford it is an example of not living within your means.

Make savings automatic
Take advantage of payroll deduction in your employer’s retirement plan. Every investment company now should offer an automatic debit from you checking or saving account into their investments. Studies show those who make their savings plan automatic save more because they stick to the plan.

Buy income producing assets
One major point in Robert T. Kiyosaki’s book, "Rich Dad Poor Dad" is that we consider cars and boats as assets but they do not really increase our net worth over time. You want to buy asset that will increase your net worth and wealth. They are assets like stocks and real estate.

I could keep going, but I think this is where most individuals need to start. If you have already done the things above good for you and I will continue to write about how to get your financial house in order in future blogs.

Happy New Years!!


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