So you bought shoes instead of bonds last year...
by Kay R. Shirley, Ph.D., CFP
October 25, 2007
The calendar next to my laptop computer indicates that I am starting to compose this
article on day 261 of the year 2007. With luck, that means readers who may find value in the
following five tips for improving one's financial situation may have approximately 60 days to
either renew the New Year's financial resolutions they made and let slip out of their grasp
during the past 10 months or establish resolutions now and carry them into 2008. Readers who may
find no value in the tips can continue to seek years of financial ambiguity! – or hopefully are
already the right track!
To improve one's financial situation is a relatively easy exercise. In fact, it can be looked
upon the same way as getting rid of an extra five pounds. Both require total commitment and both
yield personal satisfaction.
Is it worth the effort? Just ask those who succeeded.
Accept the Wake-Up Call:
There is no time like the present to start on your journey toward financial independence.
Every day you procrastinate is a day of lost opportunities. Time flies, and before you realize it,
you are older but neither wiser nor wealthier. Make the commitment now! Set your alarm clock to
remind yourself that now is the time to slim down physically and fatten up financially!
Pay Yourself First:
Always reward yourself first. Out of every paycheck, immediately take $50 to $100 and buy
yourself a little gift. WRONG! The last thing you need is another pair of earrings or a designer
handbag. Instead, place this money in an interest bearing savings account or speak with your
financial adviser about a suitable investment.
Just think, if you are paid biweekly, you could have more than $2,600 saved after the first
year alone ... even without interest! Let this be in addition to any participation in an
employer-sponsored retirement plan, in which you should fully participate...15% is advised.
Control Spending:
Do you really need that chocolate hazelnut latte? Not only is it costly, but
do you really want the added calories (even in a lite latte)? Drink water. It's cheaper and much
healthier. What about all those meals eaten away from home? Were they really worth the cost (or
even the calories) – unless of course someone else was paying for them.
In all seriousness, we all can identify dozens (not like in donuts!) of ways to put a
restraint on spending. All it takes is will power. By the way, don't forget the big ticket items,
like premium movie channels or even the pair of Jimmy Choo's that were to die for. Now may even be
a good time to look into refinancing high interest rate loans.
Lower Credit Card Balances:
At one point, I really thought that there was nothing more disheartening than
a client receiving monthly credit card statements and realizing that payments were still due for a
dress that never made it past the fi rst spilled glass of merlot. Well, now I know of something
more disheartening. Have you looked at the interest rates now being levied on unpaid balances?
Outrageous to say the least! Please, if you really want to help yourself get on the road to
financial security, reduce high credit card debt by first paying off the cards with the highest
interest rates and then taking shears to those pieces of plastic inundating your purse.
Keep Track by Looking Back:
Have you ever bought something and fi ve minutes later, you HATE it? That's buyer's remorse
of the worst kind! You tried it on, and it was marginal – but it was on sale and you got it anyway.
You never even wore it after you got it home.
Follow the rule: When in doubt, don't! You can see the cumulative effect of the bad
purchases if you look at how you spent your money this year. Keep track by looking back. Go through
your canceled checks and credit card statements for this past year. Not a pretty picture? Now's the
time to set you mind to making changes. Start with controlling holiday purchases, and don't overdo
them.
The time to start was yesterday! So do it now. If you have money, assess where you are and
meet with your financial adviser to get a fresh look at the numbers. If you don't have money – take
the steps to change it for 2009! You can do it!
Financial Resolutions for 2008
• Accept the wake-up call
• Pay yourself first
•Control spending
• Lower credit card balances
• Keep track by looking back
