With the new year upon us, it’s time to reflect back on 2007 — all of our money successes and mistakes — and consider how to apply the things we’ve learned to 2008. Bankrate does just this in its 2008 Financial Forecast. From the best and worst of 2007, to the money experts’ crystal ball predictions for 2008, this guide provides a “wealth” of knowledge about your money.
Need some money resolutions for 2008? This 12-step program to fiscal health should give you some ideas:
1) Stop overspending. Credit cards are super convenient, but their ease of use can also conveniently lead you to overspend. Need a trick to help you stop the credit card madness? It may seem odd, but I’ve heard it works for overspenders: Freeze your credit card. That’s right. Try dropping your card in a plastic bag, add water and stick the card-baggy in the freezer. You’ll still have access to it if you need it, but having to wait until your card melts will give you some time to get over the impulse of buying things you don’t need.
2) Spend within your means. Set up a plan so you know where your money’s going and where you might make improvements. All you need to do to start is figure out how much you make and how much you spend on necessary expenses. What’s left over is how much you can afford to spend on the other stuff.
3) Pay off debt. Start with the debt that has the highest interest rate first and then work your way down the ladder. Just make sure that while you’re concentrating on paying that highest-rate debt, you’re still making at least the minimum payments on your other debt obligations.
4) Identify your wants vs. your needs. What are your goals in life? Take care of your needs first, then see what you can do about your wants.
5) Pay yourself first. Save, save, save! Paying yourself first simply means that you need to save before you spend. The best way to do this is by setting up direct deposit from your paycheck into a savings account — whether it be plain savings or a money market account. By making it automatic, you remove the temptation to spend.
6) Get the right insurance for your situation. For instance, if you have kids, life insurance is important. However, if you don’t have anyone who relies on you to support them financially, there’s no need to spend your hard-earned money on a life insurance policy.
7) Save for retirement. Here’s another case where direct deposit makes it easy and painless to save for your future. And if you’re lucky enough to work for a company that matches your retirement contributions, take advantage to the max! If you don’t, you’re basically saying no to free money.
8) Improve your credit score. Your credit is more important than ever — it’s absolutely key to unlocking the best interest rates and terms for credit cards, mortgages and other loans. The first step to improving your credit is getting a copy of your credit report and making sure that what’s there is accurate (Quizzle will be able to help you with that soon with a free credit report and score). Next, educate yourself on how to properly manage credit.
9) Use debt wisely. Be smart about what you borrow and why you’re borrowing. Enough said.
10) Save even more. Let’s say you’re putting $200 per paycheck toward your savings. Great work! Now, find a way to increase your savings contribution to $300 per paycheck. Cut unnecessary expenses. Look for bargains on big-ticket items that you need. Sell the clothes you’ve been storing in your attic on eBay. You can find (legitimate) ways to save more if you look for them.
11) Avoid scams. Don’t leave yourself open to identity theft. Monitor your credit on a regular basis and check your other financial accounts to make sure it looks the way it’s supposed to look. Need help? Look into identity protection services like Lifelock and get the pros to watch your back.
12) Keep your financial plan up to date. Once you get your finances in order, keep them in order. Your situation is bound to change. Make sure your financial plan changes with it.
Make 2008 your best money year yet. Happy New Year!
Tags: quizzle, money, new year, personal finance, financial strategies, bankrate