This month I’ll be on over 25 television and radio stations talking about the Top Five Money Moves for 2013. So look and listen for yours truly in the media. My long time stylist, Ricardo, saw me on a national show and said, “You looked and sounded just like you do when you sit in my chair!” My daughter, Bethany, was in the salon with me and piped in with, “That’s what happens when you’ve been on television as much as my mom has.” I could have sworn she rolled her eyes when she said it, but she insists she didn’t. I really do loving helping families do money matters smarter and media helps me get the good word out to these people across the country.
According to a recent survey, 40 to 45% of American adults make one or more resolutions each year. Among the top new year’s decisions are resolutions about weight loss, exercise, and money management or/ debt reduction. While a lot of people who make decisions during the new year do break them, research shows that making a decision to change is useful. People who explicitly make resolutions are 10 times more likely to attain their goals than people who don’t explicitly make resolutions.
If one of your resolutions involve getting fiscally fit, then there are five things individuals, couples and families should do every January, year in and year out, to help their financial picture. These five money moves will help you pay down debt, save more in your emergency fund and be prepared for possible financial setbacks in 2013. They include:
1) CUT COSTS ON FIXED EXPENSES – there are some expenses that people rarely check, but they could be missing out on hundreds of dollars of savings.
- For one thing, it’s important to call your homeowners insurance provider and ask about getting a better rate. Oftentimes, you don’t think about this policy because the bank may cover this premium and you put that renewal to the side—wrong answer. The other biggie in fixed expenses is auto insurance.
- If you drive less, in safer ways, and during safer times of the day you can save money on your car insurance. If you are military or a military legacy (child of someone who served), be sure to compare prices at USAA for car, home and other benefits to members.
- One final, quick tip to cut costs by shopping around, is for groceries. Go to couponmom.com where the site will tell you what’s on sale in your neighborhood, which items have coupons, double coupons and store coupons. Using this layered savings approach in the store helped our large family save $160,000 over the course of twenty year! (Yes, you read that right, it’s not a typo).
2) COMPLETE TAXES EARLY & FREE– The sooner you file, the sooner you’ll get your refund. Even as this year’s tax laws get settled, you can still get your return started online. I recommend the online TaxACT Free Edition has everything you need to prepare, print and e-file your federal return free. TaxACT and I have worked together to help American families and specifically military families, because their tax solution guides you step by step through your return and guarantees your biggest refund. It’s fast, easy and even offers free help. Remember that the fastest way to get your refund is to do your taxes online, e-file and choose direct deposit . And once you have that refund, put the money to smart use like paying down consumer debt, bolstering your savings or saving to pay cash for your next car. Or, if you are a Kay kid, then you can use it to buy your Mama a really nice present!
3) CATCH UP ON SAVINGS – In money moves one and two, you freed up extra money by cutting costs and getting your refund back early. I recommend that you take a hard look at your emergency fund. If you are a single income family, you should have twelve to fifteen months of living expenses in this fund. If you are a dual income family, you need six to nine months of living expenses. With uncertain employment situations, it’s important that you save for a rainy day. Use 50% of that tax refund and money saved from cutting fixed expenses to help build up your emergency fund. Then every time you save money on expenses, write a check or transfer those funds into this important account. It will become a habit and you’ll build that account up more quickly.
4) CUT OUT DEBT – If you took 50% of the money you gained from steps one and two and put it in your emergency fund—good job! Now it’s time to use the other 50% to pay down credit card debt and get started on the “snowball effect” of getting rid of consumer debt. This snowball plan works by paying off the credit card with the highest rate first. Then you take the payment you would have made on that first card and put it toward the next card on your list, thus doubling up on that payment. Each time you pay off a card, you keep taking what would have been that minimum payments on paid off cards and put them toward the next credit card balance. You will eventually find yourself making triple, quadruple payments and you can see why we call it the “snowball effect,” thus getting ahead of interest charges and paying your debt down more quickly.
5) CARE AND SHARE MORE – This is a good time of the year to map out a strategy to give more and get more out of your giving so that you can itemize your deductions. Go through closets and donate clothing and furniture to IRS- approved charities, but keep track of your donations. Go to the giving arm of the Better Business Bureau to check out the status of charities before you give. Ask charities for receipts. You usually get more for each item than you would selling it at a yard sale. Remember, monetary donations and certain expenses for volunteering are also deductible.