It’s that time of year when we all vow to change our ways and resolve to go on a diet, quit smoking, or get out of debt. How many of us actually have a plan in place to make our resolutions a reality? Unfortunately most of us don’t and this is why we are doomed to fail before we even start.
Yes, money is necessary to support our lifestyle, but do we let it determine how we live our lives? The fact is many of us do. We allow ourselves to live up to or above our means which often leads to debt, no savings, and dumb financial moves. Am I guilty? Absolutely! Can I change my money mind and resolve to do better this year paying down debt, saving, and being frugally smart? Of course! We all can but, we need a plan. This year as I change my money mind my focus will be on total debt elimination and savings.
Paying Down Debt
While I don’t have a credit card, I do have a mortgage, a car payment and medical bills to work on. The feeling these debts leave me with is fear. What would I do if I lost my job, couldn’t work, or was hit with additional debts I hadn’t planned for; such as home repairs, additional medical bills, or car repairs?
My emergency fund was completely depleted in 2011 due to a few unexpected curveballs that were thrown my way; divorce, renting an apartment, and medical expenses. Had I been better prepared I could have easily caught the balls, even those out in left field without a hitch.
- Paying off my mortgage early. My mortgage is on a home I currently am renting out. I earn approximately $200 more than the mortgage payment and associated costs and this year that $200 will go towards additional principle payments vs. in my bank account. Goal: Pay down an additional $2400 of the mortgage in 2012.
- Paying off my car. I owe approximately $8,000 on my car. My current car payment is relatively inexpensive and I plan to add an additional $100 a month in 2012. Goal: Pay down the car by $1200. This puts my payoff in early 2013 leaving me with no car payment after that=extra savings for 2014!
- Medical bills. Currently I am on a payment plan of $50 a month for my $6,000 in medical bills. I know I can do better and I plan to up that number to $100 a month in 2012.
- Credit card debt. As I mentioned, I am fortunate enough not to have any credit card debt. Unfortunately millions of Americans do and this should be the first debt you tackle in your plan to change your money mind. Credit card debt usually costs you the most with rates as high as 29%! Many are throwing thousands of dollars away each year in finance charges and fees that could be avoided. If you have credit card debt resolving to make a difference in 2012 will definitely improve your bottom line. There are many ways you can tackle your debt; to review your options check out this post.
Saving Money
When you are in debt saving money seems like an impossible task, but it doesn’t have to be. Again changing your money mind and how you view what money means to you plays a major role in reaching your savings goals. For example, my “get out of debt” goals are lofty—I am essentially resolving to use $350 each month in an effort to get out of debt more quickly. How much will that leave me with to achieve savings goals?
The only way to find out is a careful review of my budget and perhaps a few cutbacks. I found that by eliminating a few things I should be able to save at least $300 a month. Goal: A start to a rebuild of my emergency fund in 2012 of $3600.
Not just Frugal, but Frugal Smart
2011 was indeed the year of extreme coupon madness, a switch to simplistic living, and Groupon. But, how much are these tactics actually saving you and how do they affect your bottom line?
- Extreme couponing. Let’s face it most of us do not have the time to scour circulars, clip thousands of coupons and comparison shop to achieve the deals had by extreme couponers. What we do have is the ability to devote an extra hour a week to reducing our grocery bills by being frugally smart. Clip coupons or print online coupons for items you and your family actually use. Shop smart; I started shopping at a discount grocery chain for meat, produce, and pantry staples. Over the course of this year I have slashed my grocery bill by $100 a month. The price I pay is, the store is not in the greatest section of town, and I have to bring my own bags; a price I am willing to pay to save $100 a month.
- Simplistic living. I have watched many families switch to a “simpler way of life”. They make their own soap, furniture, and even grow their own food. While this works for many you need to determine whether this is a frugally smart idea for you. For my family it is not. The time I would need to devote to these activities is just not available in my 24 hour day where I am currently only sleeping 7 hours a night-a much needed bare minimum for me.
- Groupon. While Groupon is great, are you actually using the deals you score? I tried Groupon several times in 2011 and while the deals seemed great at the time, they really weren’t frugally smart as I found myself purchasing deals I didn’t really need, thus not being frugally smart.
By taking a systematic approach to change your money mind by getting out of debt, saving, and being frugally smart you can have a financially fit 2012.
What will you do to change your money mind in 2012?
Yay on paying extra towards debts!! We use all our rental income to pay towards the mortgage on the rental. If the rental can’t be a selfsustaining entity then I’m not interested in keeping it. I don’t plan on taking one dollar of income from it until it’s paid off. And really, even then I want to just use the rent to save up for another property. It’s the wealth snowball. lol.
Good on you for putting down specific and actionable goals that you are sharing with everyone. Thats really the key to accomplishing goals in general, when you have a clear measure of success and accountability as well. Wish you the best of luck!
This is a great post, and really vibes with how I have always began a new year (or, at least, have TRIED to): with clear objectives. My website was also my accountability for a majority of those goals, although I haven’t been ss current with its updates as I should have been. Anyhow, good for you coming up with clear and measurable goals! I, too, and super motivated to start this year with clear objectives. And I plan to use the whole year to challenge myself: January will be the $100 challenge…..February might be a challenge to get at least 7 hours is sleep per night, for the whole month….March might be a challenge to work on my sewing at least 1 hour every day of that month….ect. In fact, I have dubbed 2012 “The Year of the Challenges.” 🙂
Sorry for the typos! Posting from bed from a mobile touch screen: annoying!
love the term “money mind” … it says it all. Wish we had actual goals set up a while back instead of “saving more”. Though “saving more” did help us acquire quite a nest egg that helped us get thru both of us losing our jobs. Thankfully, we didn’t need to use all of it. Now we’re both back to work and our goals are (1) pay extra towards our mortgage so we can have it paid off in 3 years vs the 6 we have remaining and (2) replenish the emergency fund with what we had to take out.
Goal #3 is to find another way to “make the money work for me instead of me working for it”. Currently I use a credit card for the majority of my bills, which I (automatically) pay off in full at the end of each month. I use this card because I get cash back in February, the amount being a percentage of what I charged. However, it is a nightmare to balance everything every month. The plan was to do it weekly, but that just didn’t pan out. Doing it monthly led to spending literally HOURS on it. So my goal – and I guess this should be my 1st goal – is to come up with an easier way to manage & keep track of everything.
Right now, though, I’m off to return some Xmas gifts that seemed right at the time but now …. well, you get the drift. I am ruthless with my Xmas spending. I only have a specific amount put aside to spend and keep a detailed spreadsheet. Since I started doing it this way – 5 years ago – I have always come either under or right on budget. I can’t use cash because most of the items are ordered on-line, so a spreadsheet keeps me on track.
Here’s to a successful 2012 for all of us!
well, my “money mind” and goals have to change slightly. Specifically, paying down the mortgage sooner. About a week after I posted my comment I found out that my contract wasn’t being renewed for 2012, so I am out of a job … again! While I am looking for another job, I plan on working thru some neglected projects. Nothing that will cost money – projects like REALLY organizing areas of my house, getting rid (selling?) some unused items around the house, etc. First though I am returning some “wants” I purchased just this past month. Yeah, I really don’t need 5 sweat pants or 4 pairs of moccasins or …. well, you get the picture. I’m amazed at how easily I slipped back into that mode once I had a little extra cash to spend on myself.
good luck to everyone
The new year has officially begun! Congratulations to all of you for changing your money mind and sharing with all of us. Best of luck in reaching your financial goals for 2012!