{Financial Cents} How To Make A Financial Plan

debt-free

Sometimes I need to remind myself that a goal without a plan is just a wish. Every morning I would pray for financial blessings but somehow found myself going through the motions, which was slowing my progress to my goal of zero debt. For me, it is about finding that balance between enjoying my lifestyle and making financially sound decisions. I have been bitten with the travel bug and I can’t wait to explore the world, I live for bottomless mimosas at brunch, and I believe shoes and the right lipstick makes the outfit. However, I also believe in building a hefty savings, going into marriage without bad debt (i.e. credit card and student loans), and building generational wealth. I must agree with Dave Ramsey, financial guru, who affirms, “Personal finance is 80% behavior and only 20% head knowledge”. I am working on the behavior part. I found that even though I enjoy shopping, I’m more likely to shop when I’m bored. Recently, I started filling that boredom with QT with the Mr. walking and exploring our city. I am focusing on better decisions, which will yield better behavior. Every cause has an effect and every decision has a financial consequence; that’s why coming up with a personalized financial plan has been my saving grace. Yes, I prayed for financial blessing…I still do, but I have also added the caveat that with financial blessings comes financial responsibility.

Check Out My Financial Plan!

1.  Write down your debt & don’t forget to include people you owe money.    I was talking with a childhood friend who say he had zero debt.  As we got to talking it was revealed that he did not include the almost $7,000 he owed to a family member and the card he maxed out in his college days.  Out of sight, out of mind, I guess.  Once we dove deeper into our conversation, he and I started listing our debt.  My list was simple- one credit card, student loans, and mortgage.  His, well…let’s just say that I composed a very sobering list on his behalf that included all the debt that he could remember.  Seeing your debt listed, makes it more real.

2.  Emergency Fund Minimum.  Baby Step One of the Total Money Makeover is to get your emergency fund to $1,000 if you have an annual income of $20,000 or more.  “Your car will need repairs and your kids will outgrow their clothes. These are not emergencies; they are items that belong in your budget. If you don’t budget for them, they will feel like emergencies”.  It was this statement from the book that caused me to stop dead in my tracks and redefine what I considered an emergency versus saving.

3.  52 Week Money Challenge- BINGO Style.  This was actually a part of my New Year’s Resolutions for 2013.  The challenge is to make a weekly deposit that reflects the number of weeks of the year. For example on week one you deposit
$1.00 and on week 27 you deposit $27.00 and so on.  I took the challenge one step further by remixing it into a BINGO style which makes it easier to be successful.  In the end, you will have saved $1378.00!  I’m using the money from the challenge to pay down the balance for my credit card and b-day/holidays.

4.  Tackle Your List.  I revealed in the post, Tackle Your Credit Card Debt Today, that as of January I owed about $5300 in credit card debt.  I have reduced my debt down to $4786.00 by paying a little over the minimum and applying the Bingo Style money  to the balance EVERY Friday (I have yet to miss one), but that interest is killing me.  Without interest, my balance would be paid off by the end of the year.  While making additional payments to the credit card, I am making the minimum payment toward my student loans and mortgage.  Once the credit card is paid off, I will then apply that money to extra payments to my student loans and so on…this is called the Snowball Method.  Now, I will confess, if I had more debt, I would recommend switching between the Snowball Method and the Avalanche method, which we will discuss later in the Financial Cents series.

5.  Emergency & Savings.  Don’t forget to save that money you are no longer paying to others.  Use it to prepare for the future.  Emergencies will arise and more than likely something will come up that will cause you to tap into your savings….be prepared.

Do You Believe Personal Finance is More Behavior or Knowledge?

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12 thoughts on “{Financial Cents} How To Make A Financial Plan

  1. Okay, this totally hit the nail on the head for me. I’m a huge fan of Dave Ramsey, but it’s been difficult to get started. (Procrastinate, procrastinate…) I think this post may be my kick-in-the-butt to get going.
    Thanks for the pep-talk! 😀

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