2798: 5 Quick Ways to Improve Your Finances Before the New Year by Andy Hill of Marriage Kids And Money

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[00:00:30] This is Optimal Health Daily. 5 Quick Ways to Improve Your Finances Before the New Year by Andy Hill of MarriageKidsAndMoney.com. And I'm Dr. Neal Malik.

[00:00:42] Hey there and welcome to our Sunday bonus episode where I share an article from one of the other podcasts in our network. Today's post comes from Optimal Finance Daily where articles covering money and personal finance are read to you every day.

[00:00:56] And you can find Optimal Finance Daily wherever you're listening to this. Please subscribe or follow to get episodes every day.

[00:01:04] And with that, here's Diana with the post and commentary as we optimize your life.

[00:01:13] 5 Quick Ways to Improve Your Finances Before the New Year by Andy Hill of MarriageKidsAndMoney.com.

[00:01:21] It's almost the new year. It's time to take some massive action to improve our financial situations before the year is up.

[00:01:29] That way we'll kick things off in January with confidence and more money in our pockets.

[00:01:33] If you made a list of goals or New Year's resolutions earlier this year, now is the time to look at that list and assess how you're doing.

[00:01:41] Think about what action you can take to accomplish those big goals you set for yourself earlier this year.

[00:01:47] Now if you didn't make any goals or can't find that list, that's okay.

[00:01:51] I have five goals for you to consider to help you improve your financial situation before the new year.

[00:01:57] Number one, make your first budget.

[00:02:00] We can't improve our finances if we're not tracking our finances.

[00:02:04] With the few weeks we have before the new year, detail out your income and your expenses.

[00:02:10] Write down how much you make each month and how much you spend each month.

[00:02:15] December may be a disaster of a month for tracking with holiday shopping, but you've got to start somewhere, right?

[00:02:20] A great place to start is with your credit card and bank statements.

[00:02:24] Print out the past few months of statements, break out the highlighter, and calculate what you typically spend each month.

[00:02:30] Start with the big expenses.

[00:02:33] Housing, transportation, food, utility bills, entertainment.

[00:02:37] This exercise may be extremely revealing for you.

[00:02:41] You may find some trouble spots that are really dragging down your ability to eliminate your debt and build wealth.

[00:02:47] If you'd prefer to utilize technology to help you out, check out Tiller or Mint to support you in your budgeting efforts.

[00:02:54] I love both of them.

[00:02:56] They sync up your account so you don't have to import the numbers manually.

[00:02:59] They save you time and save you money.

[00:03:03] Number two, eliminate unnecessary subscriptions and memberships.

[00:03:07] Our monthly subscriptions and memberships can really add up.

[00:03:11] Netflix, Hulu, Audible, Amazon Prime, The Local Gym, cable TV, etc.

[00:03:16] The list goes on and on.

[00:03:18] Ask yourself, which of these are not actually making me happy?

[00:03:21] Or which of these am I actually using?

[00:03:24] Let's say you got Amazon Prime years ago, but you haven't watched a show on there in a while

[00:03:28] and the convenience of two-day shipping is actually making you buy a whole lot more when you're in debt.

[00:03:35] Then you should stop paying for it.

[00:03:37] Or you have had that gym membership all year, but you've only gone once.

[00:03:41] It's time to reconsider if you're a gym person or not.

[00:03:44] These subscriptions and memberships can add up to big dollars, take over your budget, and put you in debt.

[00:03:50] Ask yourself if they're worth it.

[00:03:52] And if they're not worth it, cancel them today.

[00:03:55] Number three, earn $500 extra and put into savings.

[00:04:01] Let's say you've examined your budget and there's not much you're spending on that isn't a necessity.

[00:04:05] Then it's time to make more money.

[00:04:08] I want to help you earn $500 before the month is over.

[00:04:11] Here are some thoughts on how to get it done.

[00:04:14] Take advantage of the gig economy.

[00:04:16] You can make fast money by working with partners like Uber, Lyft, TaskRabbit, or even Lime.

[00:04:21] I know a guy who's made between $150 and $600 per month charging up scooters.

[00:04:27] Sell 10 things around your house on Facebook Marketplace.

[00:04:31] Our trash can be turned into cash.

[00:04:34] Clothes, bikes, toys, video games, furniture, you name it, people may be willing to buy it.

[00:04:40] Especially during the holidays.

[00:04:43] Extra hours or overtime.

[00:04:45] Do you have a job where overtime is an option?

[00:04:47] This may be the time of year where your employer would appreciate the extra hours

[00:04:51] and you'd appreciate the extra cash.

[00:04:53] It can't hurt to ask.

[00:04:55] Make money from your hobby.

[00:04:58] You may love photography, writing, or even woodworking.

[00:05:01] Let's find a way to get paid for it.

[00:05:04] There are thousands of people, trust me, I've interviewed a lot of them on my podcast,

[00:05:08] who have followed their passion and made great money.

[00:05:12] They've used this money to pay off their debt, pay off their mortgage, and even reach financial

[00:05:16] independence.

[00:05:17] Now, when you get that extra $500, consider throwing this money into your emergency savings

[00:05:22] so you don't have to go into debt for the next emergency.

[00:05:24] The washer goes out, something breaks at the house, tire goes flat.

[00:05:28] We're not putting it on the credit card.

[00:05:30] We're paying cash for it.

[00:05:32] That way, we're avoiding high interest debt and creating more freedom for ourselves.

[00:05:38] Number four, develop a debt snowball plan for your debt.

[00:05:42] Okay, we're creating our budget, we're eliminating unnecessary expenses, and we're making new money.

[00:05:47] We're feeling good.

[00:05:48] Now, it's time to eliminate our debt.

[00:05:51] Write down all of your debts and the balance of your loans.

[00:05:54] Who do you owe and how much do you owe them?

[00:05:56] These debts can be credit card debt, car loans, student loans, personal loans, home equity lines

[00:06:03] of credit.

[00:06:04] Line them up from the smallest balance to highest balance and then decide how quickly you can

[00:06:08] pay off the first debt.

[00:06:10] Let's say you have a $1,000 credit card at a clothing store because they had you sign up

[00:06:14] and gave you 15% off, and that's your lowest debt.

[00:06:17] What can you do to reallocate $100 from your budget to eliminate this card in 10 months?

[00:06:24] Not aggressive enough?

[00:06:25] What can you do to reallocate or earn $250 extra per month to eliminate this card in four

[00:06:31] months?

[00:06:32] Make a plan and stick to it.

[00:06:34] You'll eventually earn your debt freedom.

[00:06:37] Number five, make five smart goals for yourself.

[00:06:41] Planning and action go hand in hand.

[00:06:43] Let's make some smart goals that make our new year better.

[00:06:47] Smart stands for specific, measurable, action-oriented, realistic, and time-based.

[00:06:53] Here's an example.

[00:06:54] I will pay off my $1,000 credit card by May.

[00:06:58] We're specific about the goal.

[00:07:00] It's measurable in terms of the debt amount.

[00:07:02] We're putting action around it.

[00:07:04] It's realistic for our finances, and we set a date to have it done by.

[00:07:08] Here's the opposite of a smart goal.

[00:07:10] I need to get my debt situation under control.

[00:07:13] Nope, not a smart goal.

[00:07:15] See the difference?

[00:07:16] Now do this for five financial goals of yours.

[00:07:19] This can be around your debt, your savings, your net worth, your career, your business,

[00:07:23] or anything else you want.

[00:07:25] Remember to be smart with your goals.

[00:07:27] Specific, measurable, action-oriented, realistic, and time-based.

[00:07:31] By the time January rolls around, you're going to be ready to tackle even bigger goals.

[00:07:37] Who knows?

[00:07:37] You may just experience financial freedom earlier than you thought.

[00:07:45] You just listened to the post titled,

[00:07:47] Five Quick Ways to Improve Your Finances Before the New Year,

[00:07:50] by Andy Hill of MarriageKidsAndMoney.com.

[00:07:54] What a timely post for year-end financial planning.

[00:07:58] Andy provides some good tips here on what to review when developing your budget for next year.

[00:08:04] I'd like to add that it's also a great time to review your credit reports.

[00:08:09] Since 2003, federal law allows every consumer to access their credit reports free once per year

[00:08:16] from the three major credit bureaus, which are Equifax, Experian, and TransUnion.

[00:08:22] It's important to review all three because creditors who supply the information on your open lines of credit

[00:08:28] may not report to all three bureaus.

[00:08:31] Reviewing your credit reports once per year ensures that you aren't forgetting about any debt

[00:08:35] or open lines of credit while you're putting together your budget.

[00:08:39] It's also a great opportunity to monitor for fraud.

[00:08:43] If something looks fishy on your credit report, you can file a claim with the credit bureaus to have it corrected.

[00:08:49] In terms of debt repayment, Andy suggests the snowball method where you pay off the smallest balance first.

[00:08:57] The snowball method of paying off debt is often recommended so that you get some early wins that will keep you motivated.

[00:09:04] However, this method does not consider interest rates,

[00:09:07] and it's not the fastest or most efficient method for debt repayment.

[00:09:11] The fastest way to pay off debt is to pay more than the minimum on the highest interest rate debt first,

[00:09:19] regardless of balance.

[00:09:20] This is also known as the avalanche method.

[00:09:23] I used a debt reduction calculator that showed the snowball and avalanche methods side by side

[00:09:30] after I entered in all my open lines of credit, interest rates, and minimum payment amounts.

[00:09:35] The avalanche method took significantly less time, and I paid less in interest.

[00:09:41] So seeing that helped me bypass the motivational aspect of paying off smaller debts first.

[00:09:47] And that's a wrap for another Tuesday show.

[00:09:50] Have a great rest of your day, and I'll be back tomorrow as usual, where optimal life awaits.