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Money Girl

249 MG 7 Days to Healthier Personal Finances

Take the 7-day challenge to improve your finances and future security.

Broadcast on:
02 Jan 2013
Audio Format:
other

Take the 7-day challenge to improve your finances and future security.

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Card has no cash access and expires in six months. Hi, everyone. I'm Laura Adams, and you're listening to the Money Girl Podcast. The New Year is a time to reflect on what we've accomplished in the previous year, and what we want to do differently, going forward. Some aspects of your financial life may not be under your control, like whether your home will appreciate in value. But most of your personal finances are, so I want you to take my seven-day challenge. Here's a plan to follow for seven days in a row, or one day a week for seven weeks, that will make your personal finances healthier. Day number one, clarify your financial goals. If you haven't created any financial goals yet, I'll give you a few questions that will get you started. Block out an hour, either by yourself or with your spouse, to think about the answers. While you take a walk, go on a long drive, or enjoy a relaxing dinner. How you answer the following four questions will help you know what to focus on in your financial life for the short and long term. Number one, what about my or our financial life was disappointing last year, and what needs to change so it doesn't happen again this year? Number two, what part of my or our financial life worries me the most, and how can I build financial safety nets to alleviate the stress? Number three, in five or 10 years from now, what would I be proud to say that I had accomplished in my or our financial life? And four, when I retire or can't work anymore, will I look back and wish that I had lived my financial life differently, or that I had saved more money for the future? Day number two, create your personal financial statement. Once you've thought about the goals you want to achieve, take a hard look at where your financial life is right now. I recommend creating a tool that I call your Personal Financial Statement, or PFS, because it's the best way to get a bird's eye view of your financial situation. To create your PFS, first, make a list of your assets and their current values, such as cash accounts, investments, real estate, and vehicles. Then, list out your liabilities, such as a mortgage, car loan, student loan, or credit card debt, and their outstanding balances. Also, include the interest rate you're paying for each debt, so you know which ones are costing you the most on a percentage basis. When you subtract your total liabilities from your total assets, you've calculated your net worth. For instance, if you own $150,000 in assets but have $125,000 in debts, your net worth is $25,000. Your net worth is an important number, because it says a lot about your overall financial health. I recommend that you update your PFS on an annual basis, so you stay focused on increasing your net worth over time by either increasing assets, shrinking liabilities, or doing both. Day number three, check your free credit report. Your credit report plays a big role in the health of your personal finances. You can get it for free once a year from each of the three national credit reporting agencies, Equifax, Experian, and TransUnion, at annualcreditreport.com. Here's a quick and dirty tip. Instead of getting all three credit reports at once, space them out and pull one from a different agency every four months. It's better to check up on a different report three times a year because you'll have the opportunity to correct errors more frequently that might be hurting your credit score. You can also call foul right away on any fraudulent activity that could devastate your finances. In Colorado, our freedoms are everything. Gabe Evans would rip them away. 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And if you ever need help or guidance, they have an expert license support team to answer your questions, handle all the paperwork, and advocate for you throughout the process. It's never too late to plan ahead. Go to policygenius.com or click the link in the description to get your free life insurance quotes and see how much you can save. That's policygenius.com. Now at T-Mobile, get four 5G phones on us and four lines for $25 a line per month when you switch with eligible trade-ins, all on America's largest 5G network. Minimum of four lines for $25 per line per month without a paid discount using debit or bank account, $5 more per line without a pay plus taxes and fees and $10 device connection charge. Phone to be a 24-monthly bill credits for well qualified customers. Contact us before canceling entire accounts to continue bill credits or credit stop and balance on a required finance agreement to bill credits and if you pay off devices early, ctmobile.com. Day number four, investigate options to reduce debt. If you have high interest debt, like credit cards, payday loans or retail store accounts, stay vigilant for ways to optimize it or pay less. This goes hand in hand with maintaining a clean credit report because the better your credit score, the more money you can save. Having an excellent credit score allows you to pay less for new credit accounts, but it also opens the door for more ways to knock out your existing debt faster by getting approved for a money-saving refinance, consolidation or balance transfer. Day number five, create a spending plan. If you're living paycheck to paycheck without putting any money aside for your retirement or emergency fund, you need to create a spending plan. Start by looking at how you've been spending over the past several months and see where you can cut back. In order to accomplish your financial goals and live within your means, there are three options. Earn more, spend less, or do both. I go into detail about creating a financial plan in chapter two of my book, Money Girl Smart Moves to Grow Rich. Day number six, set up automatic retirement contributions. Participating in a retirement plan at work is a great way to make sure you're consistently investing for your future. If you don't have a workplace plan, you can invest in an IRA as long as you have some amount of earned income. Set up a direct deposit, so a percentage of your paycheck is automatically invested in your IRA, or set up an automatic transfer from your bank account to your IRA once a month or every payday. Automating your financial goals is the best way to make sure you accomplish them. By the way, I've done several podcasts on IRAs, so go to the Money Girl section at quickanddirtytips.com and type IRA into the search bar to learn more. I'll also include links at the bottom of this show transcript, which is episode number 249. Day number seven, shop your insurance. Insurance is a product that we all need in order to manage various types of risk in our lives, like expensive medical care or losing income due to a disability. Check out MetLife.com, where you can get an instant quote on affordable term life insurance. Since we pay for insurance year after year, it's easy to forget to shop around for lower rates. Make an appointment to discuss your policies with your insurance agent to see where you can reduce your costs, but still have adequate protection. So let's review the seven-day challenge. Day number one, clarify your financial goals. Day number two, create or update your personal financial statement. Day number three, check your free credit report. Day number four, research options to reduce debt. Day number five, create a spending plan. Day number six, set up automatic retirement contributions. And day number seven, shop and reevaluate your insurance. If you accept this seven-day or seven-week challenge, share your thoughts and results on the Money Girl Facebook page. Just go to Facebook.com and do a search for Money Girl. To follow me on Twitter, my username is @LaraAdams with no space. If you need some help with your New Year's financial resolutions, just grab a copy of my book, Money Girl Smart Moves to Grow Rich. It tells you what you need to know about money without bogging you down with what you don't. It's available at your favorite bookstore in print or as an ebook for your Kindle, Nook, iPad, PC, Mac or smartphone. You can even download two free book chapters at smartmoves2growrich.com. I'm glad you're listening to Ching. That's all for now. Courtesy of Money Girl, your guide to a richer life. H5N1 Bird Flu is spreading in poultry and cows. It's rare in people, but bird flu can make you sick. If you work with poultry, dairy cows, wild animals, or with raw unpasteurized milk, wear protective gear like coveralls, NIOSH approved respirators and eye protection, and wash your hands often. If you start feeling sick, seek medical care and tell them you work with animals. Learn how to reduce your risk at cdc.gov/birdflu, a message from CDC. Imagine what's possible when learning doesn't get in the way of life. At Capella University, our FlexPath learning format lets you learn on your own schedule. A different future is closer than you think with Capella University. Learn more at Capella.edu.