As I had a particularly rough visit home last weekend and did not have the energy when finally got the time to write, my fantastic friend J. Money agreed to help me out with this post. J. Money writes for Budgets are Sexy – A laid back finance blog of a guy just trying to spice things up a bit. He also finds budgets….well…sexy! If you like what you see, pop on over and say hello. Or better yet, subscribe to his (free) V.I.P. Newsletter.
Rockin’ out your finances is smart anytime, but with the economy these days a little extra attention can go a longer way. And luckily, smart doesn’t mean complicated! Many of us try to make things a lot harder and convoluted than we have to, but it’s the simplest moves that will keep our nest eggs happy (and ourselves sane).
I present to you 3 of my all-time favorite strategies. The more you can check off, the better your financial life will be. And you’ll see they’re pretty plain words of advice as well – just don’t mistake boring for not worth while! They may not look all that sexy, but they’ll sure keep you out of trouble.
1. Track your spending for 3 months
This is the one thing you can do to learn EXACTLY where your hard-earned money goes to. Think of it as an E-True Hollywood Story based on Your Financial Life – you think you know, but you have no idea! Haha..okay, well maybe it’s not that drastic, but you’d be amazed at the things you’d find if you actually sat down and sorted through it all. Even if you do it just one time, and one time only, it’ll give you a better over all picture of your finances.
Once you know exactly how much you spend, you can then figure out how to move forward – whether it’s to remain on the same route you’re currently taking, or move to a newer one. I had guestimated a budget of $500 for my credit card each month (I put most of my expenses on it for better budgeting & cash back rewards), but in reality i was spending between $800-$1200! Whoops. I then created a more realistic budget. (if you need help finding one that works, try some of these budget templates I’ve collected from around the web.)
2. Create an Emergency Fund
The emergency fund is important, if only for great peace of mind. There’s something to be said in having a pile of cash in your account for whatever it is you’ll need it for. I really don’t know what constitutes an emergency, exactly, but for me it’s more of a stash to keep myself out of trouble 😉 As for how much to put in there, I personally shoot for 3 months, but it really depends on what you’re comfortable with. It can be 2, 3, even 6 months, whatever you feel would make you sleep better at night. Once you reach that point, you’re all set! You can then go about using your money as you wish, knowing you have that safety net.
3. Pay off all Bad Debt
Get rid of it! Whether it’s credit cards, outstanding loans to friends or family, or whatever – it’s not great to have. This is much easier said than done, of course, but my goodness if it’s not true. It effects everything from credit scores, mortgage rates, car loans, and even worst – your overall happiness 🙁 What would you do if you had $0.00 in debt?! How insanely awesome would you feel! It’s not gonna happen overnight, and it certainly won’t be easy, but it needs to happen. Whatever you need to get rid of it, do it.
Again, these aren’t the hottest or newest ideas around town, but they work. And they work WELL. It’s all about getting your mind right and staying focused. If you can do that, you’ll be a lot better off once this crap storm comes to an end. Shoot, you do just ONE of the three items and you’ll be much happier! All you have to do is start.