I flippin LOVE New Years. I always make resolutions....I always try to enter the new year with a purpose, a plan, and high hopes.
Yes, I am probably that really annoying person who proverbially clogs up the gym treadmill for the first part of the year. Except, not...because I'm a Crossfit gal, but you know what I mean. I like to make plans....and sometimes they stick and sometimes they fail miserably.
But, if your plan is to kick debt in the behind in 2018 and get your financial life in some order, THAT I can help with. I've dedicated a ton of time to different ways of managing our finances to see what works the best. I've worked out my personal finance muscle and I'm pretty ripped at this point. Still have some work to do on those little debt love handles, but we are on our way. So, for your New Year, here are 5 things YOU can do to prepare to be a personal finance winner in 2018!
1. Make a List of ALL Debts
Even those little ones you "don't count" or the big ones you believe you'll have a payment for FOR-EV-ER. List them all out, however you'd like. Smallest to largest, by interest rate, etc. But, regardless of what your opinion is on your debts, if you don't know WHAT you owe, you'll never get a handle on it. And yes...the number will probably be scary.
2. Make a List of ALL Income Sources for 2018
If you have a normal job with a normal salary (where you get a W-2 at the end of the year), this will be relatively easy. Take your 2017 salary and keep your monthly take-home expectation the same. Let's say you expect to get a raise in 2018. DO NOT INCLUDE THIS. This is counting your chickens before they hatch....and what if you get a dead chick and crap, now what?
Now, if you're self-employed like I am, this is considerably harder. I have been self-employed for 10 years and I still have a hell of a time with projected income. What I do is I take my yearly net income (net is what I get after expenses and taxes are taken out) and divide that by 12. That's my monthly "take". If I have a much better than average month, that's a bonus. If I have a worse month, I have my savings from better months to carry it.
If you have a side hustle, like I do with freelance writing, you can decide to include that or not include that in your "Debt Slaying Weaponry". Some folks look at side-hustle money as savings alone, or money to invest only.
3. Decide Your Debt Slaying Strategy
There's more than one way to skin a cat (ew). We have always worked the Debt Snowball, which is when you list your debts smallest to largest, regardless of interest rate. You pay the minimum on all of the debts except the smallest. You attack the smallest with a firey vengeance. You can also debt slay by listing debts out by interest rate. This may take longer and you don't get those early wins with the little debts that help you gain momentum. So, this is why we prefer the snowball.
4. Figure Out How You Can Downsize
The best way you can do serious damage to your debt dragon is to sell a bunch of shit you don't need. Now, I'm a little weird. I actually think this is pretty fun. Go through the house and be RUTHLESS. You wouldn't believe the amount you can get for some pretty mundane items.
Throw those babies on Ebay and throw that extra money towards your smallest debt.
Another plus to downsizing is you can clear physical clutter which so often leads to mental clutter. Start fresh, with what you really NEED instead of all of those things you WANTED but only led to money spent and space/time wasted.
5. Have Grace With Yourself and Your Plan
Like any resolution, the more you go "full on" at the beginning of the year and change everything you've ever done, the less likely you are to stick with this lifestyle shift. Because that's EXACTLY what is wrong with resolutions, as much as I kind of like them. They are not "resolutions"....if you want them to stick, they HAVE to be lifestyle shifts. And lifestyle shifts take a ton of work, dedication, and CHANGE. Deep down personal reflection and change.
If you're a raging shopaholic with a major entitlement problem and you've always been this way, shifting everything to become a non-spending minimalist who does everything with intention is, while an admirable goal, probably not going to just happen overnight.
I've NEVER been a very good shopper. I usually put back most of what I pick up at any store and I spend very little on myself over a given year....and even I still "slip up" here or there and buy something completely frivilous and unneeded. It happens.
So, my point is, we can't just QUIT if perfection isn't reached. The whole point in a lifestyle shift is baby steps. It sounds pretty trite but it's totally true: if you fall in love with the PROCESS you will see results. Because your body and mind and spirit with ache for the process, whatever it is. If you fall in love with Crossfit, you're going to see results. If you fall in love with eating clean, you're going to see results. Fall in love with debt slaying, you will see results....because every facet of your life will become infected with that loving outlook. You'll start to eat differently, socialize differently, and most importantly you will spend differently.
That is when the real shift begins....and the real work is done.
So with this New Year, if you intend on making financial fitness your goal, make baby steps your plan. Not necessarily THEE Baby Steps....but small, incremental moves that will get you to a successful end.