Friday, April 6, 2018
Resolution Checkup: How Was Your First Quarter of 2018?
We have now entered the second quarter of 2018. While winter struggles to hang on, brighter and longer days are upon us. It will soon be summer and a pressing question I have for all my followers is: How did the first quarter go for you? I wrote a post with 10 weeks left in 2017 about accomplishing small tasks to get 2018 started right. I also posted an article in early January about goals you can set for yourself for every month in 2018 to make this the best money year yet. While I have happily added a few dozen new clients this year so far, I wonder about those who read and do not act. Are you working on your finances on your own? Have you begun to think about what matters most to you including your future? Today, I am going to speak about 5 Basic Areas in which those of you who haven’t followed through on your New Year’s resolution of getting better with money can focus. Remember, calendar deadlines are for suckers. Starting to get your money right could and should happen at any time.
1) Are you cashflow positive this year?
One sure fire way to get into and stay in debt is to be spending more than you are making every month. Seems pretty simple, but the majority of people who get into consumer debt have done so through smaller expenses that add up over time. It is when you have these types of spending habits that a large purchase will come around and blow you out of the water. This is why being cashflow positive is so important. The goal of every month should be to have a surplus of cash. This will allow you to use some of that excess cash should small emergencies occur. Once you have built up enough of this excess cash you will have enough money to weather bigger financial storms and viola, you stay debt free.
We all have things we can eliminate from our spending. You can start by putting yourself on a cash diet, meaning you withdraw the cash you will need for the week and once it’s gone, you are done. Also, try printing out your bank statement or VISA statement and highlight what you think you can cut out. Again, we all spend money on useless stuff and if you are not cashflow positive, it must be addressed.
2) Are you making more money?
I believe everyone should always have the mentality of trying to make more money. The reasons are numerous, but I will give you just a few. Firstly, no one will ever care about your future as much as you. This means that you must focus on making more money every year to keep up with the rising cost of goods. Many people allow their employers to get away with not giving them a regular raise. While employers that do that are pieces of garbage, in my opinion, you must take the effort upon yourself to find that extra money. This is especially true if you have debt. Listen closely to this statement: There is no way you will pay off your debt by not making more money and spending less money. It won’t happen. So, you must find a way to scrape together some extra cash even if it means giving up your weekends. I am not in debt and I work 7 days a week. Maybe you should too, or at least start with 6.
Try picking up a side hustle during the evening or on weekends. There are so many mindless jobs that you can do for some extra cash. Even something as small as $100 extra dollars a week can really add up. $100 a week is $5200 a year. $5200 a year is $156,000 in 30 years. $100 a week for 30 years compounded at an 8% rate of return is $613,088.73! Cough, Cough, retirement……
3) Are you paying down debt?
Many young people I meet, and a lot of older people too quite frankly, have the goal of paying down debt. Tis a noble goal, but noble goals require noble efforts. Have you begun trying to aggressively pay down debt? It won’t be easy, but it is possible to eliminate debt with hard work. Points one and two of this post will help you find the extra money. In order to pay down any debts, you have to have a surplus every month. That surplus can be used for whatever you want but debt elimination should be at the top of the list. Remember that when you have debt you are making the banks rich, and who wants to do that?
I always recommend using the debt snowball ala Dave Ramsey. The debt snowball concept gets you attacking the smallest debt first and then working your way up to the largest debt. The reason why this method is so successful is that it gives you some small victories during your quest to become debt free. The positive feeling after each debt is knocked out will propel you to continue on to the bigger debts, which of course will take much longer. The mental battle within of dedication and sacrifice is almost as big as the money itself.
4) Have you invested any money yet?
I have mentioned several times before that if you wish to accomplish the major goals in life you must invest your money. The reason why this is so important is two-fold. First off, inflation will eat away at your purchasing power year after year and having your money sitting in a savings account or under your mattress means you are losing money. Secondly, the habit of delaying gratification and having some money that you say goodbye to will propel you to new heights. You will become a money hoarder, a curious investor, and a forward thinker. These traits are necessary to becoming wealthy or even just having a comfortable life in retirement. Just like paying off debt, investing money is almost as much about the mentality needed as it is about the money itself.
Open up a small investment account and begin contributing. If you already have one, up your contribution. Your goal in life should be to make more money every year, not to dramatically up your lifestyle, but to increase your contributions to your future. A simple Tax-Free Savings Account will help you do this. Even something as small as 25 bucks a week will add up over time. Don’t delay, start now!
5) Have you defined your goals?
I saved this one for last for a reason. We all have goals. Sometimes our goal is to just make it through the day without killing someone. Sometimes it is something more concrete like buying a home or saving for a child’s education. Having clearly defined goals is the key to success in life. They can be business related, education, family or financial. You must articulate your goals in order to make them a reality. You also must take concrete actions to achieving them. Remember that what I do is sell investments, insurance, and mortgages but in all reality, it doesn’t mean anything. Those things are just a bunch of lines on pieces of paper. What those products exist for is to accomplish goals and protect those goals. Buying a home and keeping your family in that home. Saving for retirement and protecting your income along the way. Having financial security encompassing all aspects of your life. All these things cost money yes, but so does everything else in life. We spend money on beer, food, tide pods, coffee, and everything else in life. Do we spend money on making our lives better? Those who do become wealthy, and it is not a matter of if, but of when.
Create a set of clearly defined goals. Write them down or type them out. Ask yourself where you want to be in a year. Ask yourself where you want to be in 5 and 10 years. Ask yourself when you want to retire. If you ask yourself these things and challenge yourself to achieve them, it will happen. You show me some clear goals and some dedication to achieving them and I will show you a future wealthy person.
Is anyone as scared as I am about how fast this year is going? Before you know it, I will be writing a post in November about what you can do to make 2019 the best money year yet. Don’t wait till then to get started. Get rolling right now on small things that will make your life better. The results will come as long as you give an honest effort.
“Stay focused, go after your dreams and keep moving toward your goals.” – LL Cool J
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