{Financial Cents} How To Make A Financial Plan

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 by 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 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 come 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 says 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 on my credit card, birthday, and holidays. Update: In 2016, I saved $1,900.00 doing this challenge.  Want to join in on the 2017 version, grab your FREE copy of the bingo card here.

4.  Tackle Your List.  I revealed in the post, Tackle Your Credit Card Debt Today, that as of January I started with $5300 in credit card debt.  I have reduced my debt down to $0.00  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 was interest is killing me.   While making additional payments to the credit card, I am making the minimum payment toward my student loans and mortgage.  Once the credit card was paid off, I will now 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.

She Makes Cents Wants to Know If Personal FInance More Behavior or Knowledge?

{Money Journal} The Pros and Cons to Credit Card Upgrades

On a given week, my mailbox is flooded with credit cards upgrade offers that I immediately place in the recycle bin. It wasn’t until about a month or two ago that I received two separate offers that made me go hmmm…, maybe I should find out more. So off to the bank I went to speak with a representative about the Limitless Card and the Cash Back card.

The Limitless Card

The first offer that intrigued me was one the limitless card, known to me as the Discipline Tester. I sparingly use my card anyway, so a limitless card would actually help boost my credit score because it eliminates the debit to credit ratio for that card. There are several downsides to this type of card, though. For those who are not careful, the limitless factor could entice one to live beyond one’s means; thus, putting the cardholder further into debt. Another disadvantage to this type of card is the higher interest associated with the card… like say around 22%, which would skyrocket even more if you were ever late for a payment. In my opinion, this card is a NO GO!

The Cash Back Card

A cash back credit card is one that offers a percentage spent back to the card holder. It’s great because you can get money back for things you would buy anyway, like gas, groceries, and sometimes travel expenses. It’s also great, because you can have the cash received applied to your credit card bill, into a checking or savings, or in some cases applied to your mortgage. It’s downside- some people get so caught up in the cash rewards that they spend more than they were initially planning on saving. Therefore, you are basically spending money to get a deal…again, NOT GOOD!

Between the two cards, I did choose to upgrade to the cash back card. I found myself briefly falling into the spending trap of the cash rewards card. On a positive note, the cash back rewards seem to be accumulating much faster than the reward points system of my previous card and I will use that money to in turn, pay down my debt.  More updates to come as I feel how it is working out.

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