This week: Financial fitness tips, having more fun without breaking the bank, top books for better money making skills, 2018 money goals, why you should never hire a hacker.
Kicking off 2018 in the right financial state of mind means starting slow, implementing a solid plan, and taking it one month at a time. Rather than burning out with unrealistic debt-bashing strategies, or hard-core budgeting, consider these solid financial plans that could help you ease into the new year with lasting results.
- Plot out a personal savings goal for the year. Keep it simple and align both your monthly and yearly savings goals. Find out how much you can realistically save each month and stick with it. Keep your year-end goal in mind for motivation.
- Make an emergency savings fund a top priority. Typically, a rainy day fund should be sufficient enough to cover 3-6 months of your expenses.
- Organize your retirement accounts. Do you have a 401(k) or an IRA? If not, make that a top priority. For instance, if your company offers a 401(k) and matches what you put in up to a certain amount, consider signing up for it.
- Take a little budget-friendly trip. A great way to stay afloat financially is to be motivated to make more. Planning future trips reminds us of what financial independence can feel like. Even if it’s small, set money aside for fun and keep plugging along.
- Track your expenses. First, keep track of basic expenses such as rent, utilities, and other bills. After that, be mindful of how much is spent on eating out, movies, etc. Pro tip: Banks like Aspiration have an app that makes it easy to keep track of what you spend with your debit card. Plus, with every dollar you spend, the app gives People/Planet score to reveal whether a business is good to their employees and the planet, or not.
- Make a budget. Creating a budget is best, but make sure it’s one that you can actually follow through with. Ultimately, keeping track of expenses is a prerequisite to better budgeting.
- Invest in something you believe in. Technology ETFs, real estate funds, or cryptocurrencies are also examples to invest in. They key is to investigate what interests you. It doesn’t have to impose on your budget either – you can start impact investing for as little as $50.
- Find out about investing beyond your retirement account. Basically, you need an investment account that you can use in the more immediate future, rather than only having investments you don’t touch until you’re 60.
- Knockdown credit card debt. Rule of thumb: pay down high-interest rates first (like credit card debt), then move on to lower interest rates like student loans.
- Find a credit card that will actually get you great rewards. Whether you prefer a cash rewards card or a travel card, make certain the rewards offered are ones you will really cash in on.
- Have the money talk. Whether you’re married or moving in together, talking finances with your partner help to align your financial goals and money habits.
- Plan on asking for a raise. A new year means a new opportunity to earn more money. Chart out when you might want to bring up the money talk with your boss and ask for that raise.
Whether it’s a nice meal at a restaurant or tickets to see your favorite show, going out for a good time can often rack up unnecessary costs, especially for those with a budget in mind. Americans spend on average almost $3,000 per year on entertainment (4% of the family budget!) So, how do we have fun without breaking the bank? Here 4 popular entertainment categories to restyle:
Cost-effective solutions: Vying for dinner at that fancy new restaurant? Why not look at the lunch menu instead for lower costs. Happy hour specials are often less, and many restaurants offer special nights (e.g. half-price burger night) or have coupons.
Theater, concerts, sporting events, etc.
Cost-effective solutions: Find fun, free events. Many communities have events such as plays, sporting events, and gallery openings that are at no cost. You could consider volunteering at your local theater or offering to take tickets at sporting events. Don’t forget to check for special nights. Some theaters offer cheaper preview performances and some venues offer last-minute rush tickets for unsold seats at lower prices. Even going on an off day (aka not the weekend) when prices are cheaper can be a great alternative.
Cost-effective solutions: Rather than paying to be seated at an outdoor activity, why not seek out free activities? Hiking, bicycling, and sports activities like volleyball or local basketball are wholesome ways to connect with community, exercise, and save a buck or two.
Entertainment at home.
Cost-effective solutions: For starters, cutting back on entertainment services can be a huge way to save money as the cost of cable can certainly to drain your budget. Consider cutting the cable cord once and for all, and renting movies online. Even local libraries offer free music, movies, and ebooks. Rather than rack up money at the movie theater, why not plan a movie night with friends? Making your own snacks can save you from the concession wallet drain.
Observe the lives of financially prosperous people and you will find a repeated discipline: the majority of these wealthy people devote at least 30 minutes a day to reading. From personal finance classics to new releases, here are 6 powerful reads to activate your financial inspiration for 2018, and get you on a prosperous path:
- “Think and Grow Rich” by Napoleon Hill. A personal finance classic, “Think and Grow Rich” helps readers understand that your mindset affects your financial outcome more than anything else.
- “Business Adventures” by John Brooks. Despite being published in 1969, this book holds the fundamentals of building a strong business.
- “Your Money or Your Life” by Vicki Robin, Joe Dominguez, and Monique Tilford. A book with the idea that you exchange your time for your money as it encourages people to start reconsidering how many hours of life are expended to save money to buy something.
- “Unshakeable” by Tony Robbins. This book teaches you that if you focus on what you can control, you can be the master of your investment fate.
- “The Little Book of Common Sense Investing” by John C. Bogle. A book about building wealth and investing wisely.
- “The Automatic Millionaire” by David Bach. In this read, the author exposes a wide variety of money misconceptions and you’ll learn that you don’t need a budget, you don’t need to make a lot of money and you don’t even need the willpower to make a fortune.
A new year often incites new money goals for folks. In fact, 76% of Americans believe that they’ll be better off financially in 2018. Enthusiasm is great, but what does it really take to have your best financial year yet? Below are the basics to build a better financial goal, one that will lead to prosperity for years to come.
But first things first – is there any holiday debt?
If you have incurred any debt on your credit card over the holidays, plan on paying that down, ASAP. Before you get started on building new goals, make sure to take care of old business matters first.
Secondly, did you drain money out of your emergency reserve fund?
If the answer is yes, make sure you focus on adding more money to your rainy day fund – at least 6 months of your living expenses should be kept safe.
After those two tasks are accomplished, you can focus on the next step:
Retirement plan contributions.
Simply put, try to maximize your retirement contributions as much as possible. For instance, in 2018, the 401(k) limit for participating employees is $18,500 (that’s $500 more than last year.)
For people 50 plus, the catch-up contribution limit is $6,000 for a total of $24,500.
As for IRA or Roth IRAs, contributions remain at $5,500, and $6,500 for people over 50.
Don’t forget about investments.
Now is the time to assess what you have in stock for investments. Take a look at what you have, find out what’s in your retirement account, and consider rebalancing it. For instance, if you’re the type of investor who loathes risk (you’re a balanced investor), you may have started 2017 saying 50% stocks and 50% bonds. Because the markets were good, you could have 70% in stocks right now and could take some of the money out of the stocks, move it into the bonds, and rebalance those allocations. Don’t forget to rebalance your 401(k) as well, as you don’t want to take any unnecessary risks.
Pro-tip: Track your expenses and get your annual credit report to ensure there are no errors.
Here’s Why You Should Think Twice Before Hiring a Hacker to Fix Your Credit Score – The Huffington Post
At the moment, there is an unusual trend buzzing around the personal finance interweb: hiring a hacker to fix their credit score. If a gleaming 800-level FICO score sounds a little too good to be true, take a look at these top reasons why amping up for credit artificially, is anything but financially wise:
#1. It creates a major risk for identity theft.
While it’s tempting to hire someone to hack into the credit bureaus and change a 4 to a 7 so you can get a good rate, the downsides far outweigh any instant gratification. Turning over sensitive information like your name, address, birth date, Social Security numbers, etc. to hackers opens up the opportunity for stolen identity and further damaged credit.
#2. It’s simply too good to be true.
Just because you see a myriad of comments complimenting the hacker’s service and skills, does not mean they ring true. Look more closely, and you’ll notice poor grammar, spelling, and repeated comments on the website.
Here’s the solution:
Hack your own credit score!
Why hire a hacker to fix your score when the power to alter its outcome is in your hands? It won’t be fast, but it will be worth it. Here are the steps to reshaping your current credit score situation:
Step 1: Check your current credit score.
Federal law allows you to get a free copy of your credit score every year from each credit reporting company (TransUnion, Experian, and Equifax.)
Step 2: Find the errors that could be bringing your score down.
Check each report to make sure all the information is accurate, and if you find an error tell the credit bureau right away so you can dispute it.
Step 3: Work on the things that cultivate a good credit score.
It sounds like a simple discipline, but putting money towards paying off your debt is a great start. Don’t forget to call your lender and work out a payment plan, if that’s necessary. It’s also important to be upfront with your credit card company and see if you can negotiate any “dings” on your report.
Pro-tip: Improve your credit optimization. If you are able to extend your credit limit, it could improve this ratio.
Step 4: Only hire a legitimate credit repair service.
Finding a legitimate credit repair service, one that works within government regulations, is crucial. How do you know if a credit repair company plays by the rules? The consumer protection bureau set up these ground rules: they must have an easy cancellation policy, not promise an increase in credit score, and not take money upfront before agreed-upon services have been performed.
The bottom line: Find a company who abides by these rules, and you’ve got yourself a legit credit repair company.
Photo by Louis Amal