Yes, once again it’s that time to think about how to make the upcoming year better than the last one. In a recent survey of the top 10 New Year’s resolutions for 2014, the top 3 all deal with things like losing weight or going to the gym. Surprisingly, getting our financial house in order is only number 8 on the list! This hardly seems possible since most people agree that their finances are not in order. Do we care more about our appearances than our reality, or do we sometimes get so busy that we forget to put first things first? That being said, let’s take a look at 3 simple things we could do in the coming year to make a huge difference in our lives presently and in the future:
1. Pay down that debt. If you borrow $10,000 at 18%, and make only the minimum monthly payment of 2%, it will take you over 7 years to pay off that loan, and you will have spent $7190.08 in interest payments. By increasing the monthly payment to 4%, you will pay off that loan in only 2 ½ years, and will have only spent $2360.89 in interest. The difference is huge, and what other use of that money is guaranteed to save you 18% a year?
2. Save just a little more. Instead of simply cutting out sweets or carbs, cut out an unnecessary expense and invest it. Do we really need to go out to eat that much? Do we really need that premium TV subscription? To give one example of the difference of cutting out an extra, Instead of taking the family to the movies every two weeks ($50), if you could invest it and get a return of 6% you would have almost an extra $50,000 saved in 20 years, or $100,000 in 30 years.
3.Lastly, Get smart about your insurances. In light of Obamacare, many constituents may find that they will need to pay more than ever for their health insurance. Consequently, it would seem smart to find a way to save on other insurances where possible. Take the time to review what you are currently paying for car, home or life insurance. You might be able to save thousands! As agents are typically paid by commission, they may not be as motivated to save you money as you would be. Believe it or not, there are still persuasive life insurance agents out there who would have you pay 4-5 times than necessary for life coverage. They contend that the cash value is a savings account, but wouldn’t that extra money be better off paying down debt, available in the bank, or even better, in your retirement savings?
It would seem that a little effort could go a long way into improving our lives in the coming year. Since we as human beings all share the desire to make the future better than the past and financial fitness is something we all want and need, let’s think long and hard about making that our New Year’s Resolution for 2014!