11 simple tips to crush it financially this year

Yup. It’s that time of year. Everyone is thinking of how they are going to achieve financial success in 2017. We make resolutions, write goals, make promises, buy gym memberships and promise that we’re going to stick to it for the next 365 days. Usually, this lasts for a few months, then we forget for the next nine months and do it all over again next year. Rather than setting resolutions this year, why not focus on a few simple changes that you can make or new habits that you can start that will help you achieve your goals and reach the financial future that you dream of. Here are a few thought starters that have helped me in the past…

Attack your debt

The biggest obstacle to building wealth for the average American is the interest that they are paying on their debt. Yes, this includes your car payment. If you are in debt, above all else, you must get obsessed with crushing your debt this year. Other wealth building efforts will be minimized until you have eliminated your liabilities. Take an inventory now of exactly what your debts look like and put a plan together to get them paid off as fast as possible. Then, start looking at every dollar you spend as an opportunity to make a dent in your debt. A $4 cup of coffee? A $10 movie ticket? A $40 restaurant dinner? Those could all be small payments against your loans. Make this the year that you attack debt first, then spend what’s left on luxuries.

Get a budget

There are a million different ways to budget and most of them aren’t all that fun. I used to think that I would rather bathe with a toaster than sit down and plan out my spending each month. However, I have come around and now enjoy the few minutes that my wife and I spend each month with our budget and you can too. The key is to find the simplest possible budget that will work for you. Don’t try to get your first budget down to every single detail (I’ve seen people with a budget sorted by each retailer that they spend money at). Create large categories, assign a dollar amount to each, then refine it each month or every two weeks. If you want the assistance of a tool, I would recommend Dave Ramsey’s Every Dollar or YNAB (You Need a Budget). I also like Mint for tracking what you have spent at the end of each month.

Find a buddy

One of the best tricks for forcing yourself to do something is to add a little peer pressure to the equation. If you don’t believe me, think of the five stupidest things you have ever done. Luckily, unlike those spring break flashbacks and truth or dare memories, this type of peer pressure can actually be a positive influence in your life. If you have plans to change your behavior or reach new financial goals this year, tell someone about them. A spouse or significant other is a great place to start, but this can also be a coworker, friend, or even your social media followers. By simply telling someone that you are going to do something this year, you make yourself much more likely to stick to it over the course of the year. To make this even more effective, ask them to check in with you every couple of months on your progress. They will serve as a natural check and balance and help you to correct your behavior if you start to get off track from reaching your goals.

Truly understand your investment accounts

For the average American, the majority of their wealth is tied up in a retirement account. Unfortunately, that average American also has no idea what they are doing with that money. Even if you have a great advisor helping to manage that money, it is worth taking the time to truly understand how your IRA, Roth IRA or 401k works. What type of retirement accounts do you have? Are you maxing them out each year? Do you know much it takes to max them out? Are you taking advantage of all of the tax benefits that you can with retirement, HSA, college savings plans and other investment accounts? The reason I bring these sample questions up is that at the beginning of 2016, I didn’t know the answer to any of them for me personally. You can learn this stuff in a few hours and your return on that time will be one of the best investments that you make in your life.

Automate your savings

If you are like me, the best of intentions at the beginning of the year have a tendency to fade once you get to the dog days of summer. If you are manually saving, it is easy to do it at the beginning of the year when you are hyper-focused on it, but as time goes on, it gets harder to maintain that level of intensity. This is why I automated all of my savings transfers out of my checking account. Using automated transfers to my brokerage account as well as tools like Digit, Acorns and Lending Club, I take the guesswork and human element out of saving. I don’t TRY to save anymore. It just happens. You will be amazed at how quickly your savings will add up when you put the right tools in place.

Clean up your inbox

I did a quick inventory of my personal email inbox last month. I have received emails from 109 different retailers in the last three months. Not 109 emails. 109 UNIQUE retailers. One of the nuances of the CAN-SPAM act (that governs whether email is SPAM or not) in the United States is that if you make a purchase from an online retailer, they can send you emails in the future even if you did not intentionally opt-in. Over time, these email subscriptions add up. All of a sudden, every time you open your inbox is like walking into a shopping mall.

Go through your inbox and unsubscribe from every single email that is trying to sell you something. This includes daily deal sites, “coupon” emails, retailers like Amazon, etc. Even if you rarely open the emails or purchase anything, why subject yourself to messages every day that are engineered to make you purchase something? You are always only one click away from deciding that you “need” that thing that is on sale today. Avoid this by eliminating those emails altogether.

Look at the money going into your house

Between your mortgage, insurance, taxes, utilities and repairs, a large portion of your spending is likely going into your home. This is fine, but it’s worth taking a look at the beginning of the year and seeing if you can save any money. Here are a few things to take a look at:

  • Mortgage interest rates – Can you refinance and save money on your monthly interest payments?
  • Private mortgage insurance – If you have PMI on your house, see if you can get a new appraisal and have this removed
  • Rent – If you are not a homeowner, look at comparable homes around you and see if there is anything cheaper. Even if you are not interested in moving, it might be good negotiating leverage with your landlord.
  • Utilities – Think of ways to save on water, electricity, cable and any other utilities you pay for. If you pay for a security system, compare your rates against other offers. Again, even if you don’t want to switch, contacting your existing provider with a better offer from a competitor can yield huge savings each month. For electricity, think about getting a free home energy efficiency audit from an HVAC company. They will usually give you some simple ways you can save on your monthly bill, even if you don’t end up buying anything from them.

Find new hobbies

If you are serious about getting your financial sh*t together this year, you are going to have to look not only at the ways you spend your money, but also the ways that you spend your time. Did you spend a lot last year on dining out, going to bars or nightclubs, seeing movies in theaters, going to live events? The money that we spend on leisure time can add up quickly. I’m not saying that you should never go to a concert or a happy hour again. However, I’d venture to guess that you can eliminate a few dinners out per month at a restaurant by learning new grilling techniques. Or, instead of mindlessly going to happy hour each week, get your friends together for camping, rock climbing, hiking, running, volunteering or starting a book club and meeting at the library. In most cases, you can still accomplish the purpose of the money-sucking activity (connecting with friends, combating boredom, having a romantic night out with your significant other) without actually spending the money. A little creativity and thought can go a long way.

Cut recurring expenses

Pull out your credit and debit statements and go through every line item for the past few months. Look for any recurring expense that you have been paying for and determine if it is completely necessary in your life. The first thing that will likely happen is you will realize you are paying for subscriptions or fees that you weren’t even aware of. The second thing that will happen is that you will realize how much those little $5.99 or $14.99 subscriptions add up to over the course of a year. I did this at the beginning of last year and ended up saving over $5,000 in one quick audit.

Get a side hustle

There is one path to saving money. Earn more than you spend. Eventually, you will reach a point where you have reached a bit of a cost-cutting plateau, where trying to squeeze more savings out of your every day spending will not be nearly as efficient as it used to be. Rather than spending time clipping coupons to save a quarter or trying to squeeze your shower into 30 seconds, you can widen the gap between earning and spending by increasing your income. Enter the side hustle.

Drive for Uber, Lyft, Postmates or Amazon Flex to make money with your car. Sell products on eBay, Amazon, Craigslist or OfferUp. Create a course on Udemy. Start picking up tasks on TaskRabbit. Rent a room on Airbnb. Rent your car on Turo. Those whiz kids in Silicon Valley have created dozens of awesome ways for you to download an app, spend a few extra hours here and there, and start making money on the side. Who knows? You just might learn something and have fun in the process.

Set up review periods

It’s easy to set goals now and forget about them in a few weeks. Plan for this. Set review dates on your calendar where you will check in on your goals, your spending and your earnings. This doesn’t have to be an exhaustive, soul searching retreat or anything. Take 15-60 minutes once or twice every month or quarter to see if you are on track. If you are not, think of ways that you can get back to the path to your financial goals. For me personally, I use my “Hustle and Save” Monthly Financial Summaries as a bit of a scorecard for myself, as well as reviewing my total net worth every two weeks.

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