"By saving frugally, we reap liberty, a golden harvest.” The Spartan King, Agesilaus, spoke those words 24 centuries ago, and they are still true today. Here are some financial goals to consider when choosing your New Year’s Resolutions.
Organize financial documents. File your documents: bank statements, credit-card information, insurance issues, tax returns, bills, etc. Save yourself the misery of a frustrating or fruitless search when you need something, especially at tax time.
Know where your money goes. You need two systems: a monthly record and a daily record. I pay my bills once a month and record everything. I spot problems fast and my records give me mega credibility to get a late fee reversed (that darned post office) or, when my satellite freebies have expired, to call up and get some more.
On a daily basis, I have a separate check-book register to write down charges, debits and cash transactions. For me, simply using receipts to track my money doesn’t work too well as I can’t even find the car keys hanging by a strap from my wrist. But you do what works for you, and give yourself some hoo-hah cash to enjoy without guilt. Study what you have spent, then make adjustments and plug holes.
Shop smarter. Make a shopping list and follow it. If you are out of control, shop with cash so you are more aware of what you are spending, and then go home when the money is gone. Buy store brands and items on sale, price match, know where to shop, and read my “Dollars and Sense” column.
Review and reduce your debts. Add up the balances on your credit cards, gulp, and then add in your car payment, mortgage, taxes, and HOA. Real totals are a powerful kick in the backside to getting truly frugal. Pay more than the monthly minimum on your credit cards until they are paid off. If you only pay the minimum, welcome to debtor’s hell as the interest rates will burn you alive. Are your debts out of control? They are if you borrow money to pay other debts, miss payments, and spend 20 percent or more of your paycheck to pay your debts. (Government, are you reading this?)
Build strong credit. Careful! Credit cards are vampires playing con games that will suck you dry. Pay your bills on time, keep your charges way lower than the amount of credit extended to you, and get the best card that you can (Google comparecards.com). Get your free annual credit report at annualcreditreport.com. Fix any errors found in your report. When you go shopping, rub yourself in vampire-repelling garlic juice because the worst cards to ever have are store credit cards.
Save. “Pay yourself first” means to save money every paycheck before you pay your bills. Save as little as $25 a month, and you will have $300 in a year. Also, save raises, bonuses, refunds and gifts. Save money first and then pay cash for things. Live on less money than you bring home. How can any of us ever get ahead if we raise our expenses every time we get a raise in pay?
Set goals. The first goal is to have money for emergencies, and we all have them — the transmission fell out of your car. Next are short-term goals (like buying a computer), mid-term goals (a car) and long-term goals (education, a house, and retirement.) Saving has no driving urgency if you don’t know what you are saving for. Read these pitiful words from an arthritic old gent: “I can’t retire. I fooled around too much and never saved a dime.”
Create a spending plan. Compare your income to your expenses. When you faint at the sight of where your money goes, pick yourself up, and revise your spending until it matches your priorities. You fill in these blanks: “We are not spending money on ____ because we want ____.”
Invest. Consider the stock market, bonds, precious metals, and vehicles like IRAs, Roth IRAs, and 401Ks. Study them and pick what works for you, especially relative to how and when you are taxed. Will your employer also contribute?
Prevent identity theft. Believe it or not, my first Social-Security card said on it, “Not to be used for identification.” Snort! Identity theft is using someone’s personal, identifying information to commit fraud. Never lightly reveal your Social Security number. Don’t open any suspicious-looking emails. Shred your throw-away financial papers. Use tricky passwords. Monitor your financial statements.
Practice computer safety by installing some of these free security apps. Pick only ONE in each category; keep in mind that the word “Pro” is not the free version. For anti-virus apps, google Avast, Avira, and Panda Cloud. For anti-spyware apps, google superantispyware and malwarebytes. For firewall apps, google ZoneAlarm and Comodo.
Let’s choose some good New Year’s Resolutions leading to a harvest of financial freedom. And hey, if you only start with buying a paper shredder, that’s a good first step. Have a Happy New Year.
• Linda Hutchings is a Gilbert resident and a life-long frugal consumer — uh, cheap skate. Please reach her at: email@example.com. Send her your penny-pinching ideas.