5 Financial Tips to Take Action On

 

The clock struck midnight, the calendar turned to a new year and you may have even toasted with a glass of champagne. All of these are signals of the new year and most people rejoice because it’s time for some changes.

As we begin to fill the calendar pages of the year, think about what are your financial resolutions or financial goals? If you are struggling, don’t worry I have complied 5 financial tips to act on that will help with your personal finances every year.

Tip 1: Determine your Numbers, aka Calculate your Net Worth

When it comes to your personal finances, you need to know where you stand financially. If you are running a race, you need to know where the starting line is to get started so it is the same with your finances. Net worth can sound a little intimidating but it really isn’t. Basically, it’s a list of your assets (what you own) minus a list of your liabilities (what you owe). It is very important to know this number and at least review it yearly but I would go a step further and review it on a quarterly basis.  Examples of assets are your home, your car’s value, bank accounts balances, retirement accounts balance and stock values, etc. Liabilities are what you owe (simply put: all of your debt) to include: amount owed on mortgage, credit card debt, car loan debt, student loan debt, medical debt, etc. In the end, everyone aims to have a positive net worth.

Remember: Assets (what you own) – Liabilities (what you owe) = Net Worth

Tip 2: Check Your Credit Reports for Free and Review it in Detail.

There are 3 credit reporting bureaus: Experian, Equifax and Transunion. You are able to get a free credit report from all 3 by visiting: www.annualcreditreport.com. Your credit report will be free but if you want your credit score then you will have to pay additional for it. If you haven’t pulled your credit report in over a year, I would suggest pulling all 3 at once to comb over it for any errors or incorrect inaccurate information. Another option is to pull them periodically throughout the year. That would look like pulling one now (example: Experian), then 4 months later pull another (example: Equifax), then pull the final credit bureau report 4 months later (example: Transunion). This will allow you to view your credit reports throughout the year. If you choose to do this, please make a note on your calendar or in your phone to alert you when to pull them. Once you have your credit report there are 3 Things to look out for:

Fraudulent accounts

Incorrect account information

Incorrect personal information

If any of these are found – immediately follow the steps to contact the credit bureau and dispute the incorrect information.

Tip 3: Create S.M.A.R.T Financial Goals

With the information gathered from your net worth statement and credit report(s) its time to make some goals. Not just goals that sound good but actual goals that you plan to work to achieve. Achieving your financial goals could range from increasing your credit score to paying off debt or saving more money. Setting S.M.A.R.T goals is a popular practice that works like this:

S is for Specific – Make your goal specific. Be as specific as possible.

M is for Measurable – How will you measure and evaluate your goals?

A is for Achievable – Can you actually achieve this goal?

R is for Relevant – How is this goal relevant to you?

T – is for Time Bound – Tie this goal to a certain time. Example: 3 Months, 6 months, etc.

For example saving $1000 for a beginner emergency fund:

Specific: I will save $1000 by April 31st.

Measurable: I will save $350 in February, $350 in March and $300 in April.

Achievable: I will achieve this goal by creating a realistic budget and sticking to it, working overtime and minimizing my expenses in the areas of eating out and excess clothing shopping. All of my extra money will go towards my emergency savings account goal.

Relevant: I need to establish an emergency fund of at least $1000 in case of an emergency, this will prevent me from using my credit card and racking up additional credit card debt.

Time Bound: I will achieve this goal within 3 months.

Tip 4: Get an Accountability Partner

This is something a lot of people probably don’t consider but having an accountability partner is a great addition to your financial goals. You aren’t the only one with financial goals so call in some help with a friend, partner, spouse or even an online friend to hold each other accountable. This person will hold you to your goals and be a support system when you possibly feel like giving up. Lastly, an accountability partner could also push you to do more and achieve more.

Tip 5: Set Monthly Money Dates with Yourself.

At least once a month, have a standing date with yourself to review your finances and set up your budget or spending plan for the following month. Your money date shouldn’t be stressful and doesn’t have to take hours. A money date can be as short as thirty minutes. For example, set aside time on the first Sunday of the month to create your budget, review past spending, comb over bank transactions, view debt progress or review debt accumulated over the past month. Having this information in front of you will help determine what changes you need to make the following month or what you should possibly keep doing. This is also a time where you will review your progress on the S.M.A.R.T goals you set and perhaps a time to check in with your accountability partner to let them know your current successes or struggles.

To recap, Here are 5 financial tips to act on:

  1. Determine your net worth. (Assets – Liabilities = Net Worth)
  2. Check your credit report(s). (Access for free at www.annualcreditreport.com)
  3. Create S.M.A.R.T financial goals for 2019 (Smart, Measurable, Attainable, Relevant, Time Bound)
  4. Get an Accountability Partner (Call in a friend for some support)
  5. Set a Monthly Money Date with Yourself (At least once a month for 30 minutes)

Let me know in the comments, if you are already doing any of these or which one will you take action on first? Feel free to also share a goal with me.

Also, if you need an extra nudge to make your personal finances a priority, check out this post:

Permission Granted

 

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There are numerous articles online that have advice on ways to pay off debt including how to cut back on spending and a multitude of side hustle ideas to make more money while on your journey. You definitely won’t run out of ideas and tips to get you to the mighty goal of being debt free. However, I want to add a helpful aid during your journey which is helping me and has helped others. That one thing that has motivated me during my debt free journey is a visual aid.  Visual aids have been used for as long as I can remember especially in classrooms to help with learning.

A visual aid is used to supplement words with pictures, charts, graphs or other graphics to convey a specific message. 

In this blog post, I will discuss the visual aid that I am currently using to track my progress out of student loan debt and also my discussion with Amanda from DebtfreeinSunnyCA who also believes that using a visual aid while getting out of debt keeps you motivated. Let me add, a visual isn’t restricted to paying off debt, it can also be used to save money. 

I have used a few different visual aids before settling on my current one. Past visual aids include a thermometer that I colored in as I paid off each debt and an excel spreadsheet where I listed all my debts and then highlighted each one as they were paid off. Both are still viable visual aid options. Lastly, I settled with framing a poster sized graphic complete with stenciled in graduation caps where each cap represents $1000 in student loan debt. I created the graphic with a poster board from a local Dollar General Store, a frame from Hobby Lobby, a few Happy Planner stickers from Michael’s stores and a stencil purchased here. My goal was to create something that was very visible but also fun to color in. Once the graphic is fully completed, I will have paid off $64,000 in student loan debt. Here is the final product:

Graduating Out of Debt Tracker

I discovered Amanda from DebtfreeinSunnyCA on Instagram and noticed that she also used a visual aid during her journey out of debt. Amanda made a visual in a bullet journal to track her progress out of $133,763 of debt. Her and her husband paid off this amount of debt in 3 years and 7 months. (Wow!) 

Here is our interview:

Sugar and Money: Amanda, thank you so much for agreeing to share your visual and some of your debt free story with me today. So, let’s dive right in with a few questions. First, tell me a little about yourself and your journey:

Amanda: I’m Amanda Williams and I’m the owner of Debt Free in Sunny CA! I started sharing my debt free journey on Instagram 3 years ago. My goal was to stay motivated and find other like-minded people. Since there weren’t a lot of people sharing their journey back then, I created #debtfreecommunity to make it easier to find people who are getting out of debt. My mission is to show people that living a debt free life is possible by sharing tips and providing motivation. 

Sugar and Money: You knew your goal of debt freedom so what prompted you to create a visual aid while paying off debt:

Amanda: Ya know when you get really into something to where you’re borderline obsessed? That’s how I was at the beginning of my debt free journey. I had a coloring chart that came with the Financial Peace University (FPU) kit, but I didn’t get to color in it often. A small payment was a speck compared to the amount of debt I had. I wanted a way to celebrate each payment, so I looked to Pinterest and Instagram for inspiration on creating my own debt free tracker.

Takeaway: A visual aid can help you in celebrating those small wins to keep you motivated.

Sugar and Money: How did your visual aid motivate you? How did it feel to see the progress?

Amanda: The visual I created was a bullet journal page with lines drawn to create boxes. Each box was worth $240, so every time I made a payment in that amount, I would get to color in a box. Every payday I would get so excited to color in more boxes and see the page fill up. I used a different color of the rainbow for each debt. My favorite part was taking pictures of my tracker and looking back months later to see how far I had come. It’s an amazing feeling to go from being terrified and thinking how you’re going to pay your debt off to putting in the work and seeing your progress.

Takeaway: Take pictures of your progress of your visual aid so you can reflect on the progression of reaching your goal. Also, you have to put in the work to pay off debt.

DebtfreeinSunnyCa Visual Aid for Tracking Debt Payoff

Sugar and Money: Tell me again, how much debt did you and your husband pay off?

Amanda: My husband and I paid off $133,763 in 3 years and 7 months. We also cash flowed our wedding during that time.

Takeaway: That’s a lot of debt to tackle but they did it and so can you! 

Sugar and Money: Would you recommend that other people use a visual aid and why?

Amanda: Yes! Getting out of debt is not an easy task. You need something to look forward to, track your progress, and keep it in your face as a reminder of the goal you set for yourself. Visual aids do exactly that and they are fun! There are so many different ways to track your progress. Coloring, paper chains, and moving coins/marbles over from one jar to another are a few ideas. Plus, you’ll want the memories later on.

Takeaway: Create a visual and don’t be afraid to get creative. Feel free to look to pinterest for ideas also. There are numerous ways to create a visual aid to track your progress.

Sugar and Money: We are wrapping up, anything else that you would like to add about using a visual aid or where you are currently on your financial journey?

Amanda: Once you’ve completed your debt free or savings tracker, laminate it and keep it as a memory. It brings me so much joy looking at mine and all my paid off notices. (Amanda printed out and laminated every paid off letter from her student loan company) I think you’ll feel the same way.   Here’s the debt free tracker I made and used during our debt free journey. I counted up how many boxes were on the page and then did the math to figure out how much each square was worth. I left a row empty for boxes for interest, but it ended up not being enough. Word of advice: only color in principal balance. It makes it a lot easier unless your interest rate is low.

I created a debt free tracker printable that will be available when my online store opens on February 6th, my three year Instagram anniversary. You can sign up for my email list to get a discount and early access here: Debtfreeinsunnyca.com/subscribe.  Thank you for the opportunity to be featured!

DebtfreeinSunnyCa Debt Free Progress Tracker available online on February 6th.

Sugar and Money: And Thank you for chatting with me! I really appreciate it. 

Takeaway: Get on Amanda’s mailing list at www.debtfreeinsunnyca.com/subscribe if you would like to get a discount on the debt tracker pictured above and you can find Amanda via her blog at www.debtfreeinsunnyca.com and she is very active on Instagram @debtfreeinsunnyca so follow her for inspiration.

In Conclusion

In conclusion, I recommend that you use a visual aid to track your progress while paying off debt or even saving up for specific goals. Goals outside of paying off debt can include: 3-6 month emergency fund, vacation fund, house down payment or maybe even buying a house in full. The options are endless but a great visual aid will keep you motivated as you make progress on your journey. You will enjoy seeing the visual progression towards reaching your goal. As you create your visual aid or download one off the internet  here are a few tips in closing: Clearly define your goal and how progress will be tracked, make it colorful and make it fun!

Let me know any thoughts in the comments…Did you like the interview with Amanda? Would you like to see more interviews? Do you plan to create a visual aid to track whatever financial goal you are striving toward? Do you already use a visual? Let me know below and also please share this blog with anyone that it may inspire. Can’t wait to hear from you!

 

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