Happy New Year! If you are like me you have probably already broken your New Year’s Diet Resolution- so let’s focus on something that doesn’t involve you giving up carbohydrates and chocolate. I call it the “Challenge Everything Financial”. It is designed to help you take back control of your money.
Many people think that financial freedom is about accumulating a pile of money, yet for most, it is an elusive goal they will never achieve because they fail to realize that it is the everyday money decisions they are making that preventing them from reaching their goals. And in our consumer driven society, everyone is trying to get you to part with you money every day. What this challenge will help you with, is understanding where your money is going, and then wrangling it back in to reach your financial goals.
Step One: take out all your credit card statements. Go through them with a fine tooth comb. I bet there are little monthly items you are spending you don’t even realize. Unused gym memberships, rarely watched video streaming services, website memberships. They may seem like small dollar amounts, $2, or $8 a month. But those little amounts add up to hundreds of dollars annually. CUT THEM OFF NOW, and then increase your retirement contribution accordingly.
Step Two: pull out all your insurance policies. Review them to make sure they are current. Get fresh quotes from several companies. You can get pretty accurate quotes online quickly. Often you can save hundreds of dollars a year.
Step Three: clean out your closets and garage. Snap a picture and post on free websites to sell it. You would be surprised at how much money you can make on this. Afraid to let something go? Afraid you will need that specialized item at some point in the next year? Then put them in a box, mark the box with “If not used by January 2018-DONATE to charity” Stop the hoarding! If you donate to charity, get a receipt. It may help you with your taxes.
Step Four: challenge your empty space in your home. Have a nice spare room? Rent it out or put it on Airbnb. Or if you have a lot of unused space- downsize now! One of the greatest wastes of money is having too large a house. The kids will survive if you sell their childhood home. Plus it will force you to clean out your storage. I have moved 12 times in my 30 years of marriage and it helps keep me light. You really find out how precious something is to you if you have to keep moving it. Once, I found a box of books that hadn’t been opened in three moves. That is when I realized it was time to donate them to the library book sale.
Remember, a journey of a thousand miles starts with one step. Take some small steps today to become financially independent.