Master YOUR Personal Finances in 2013!

As always, a new year offers us all a fresh start.  Whether you are ready to pump up your earning power, start saving even more money, or manage what you have more securely.  Check out these great tips to help you improve every aspect of your financial life.  From overall financial security to specific saving and spending strategies, you will be on the Path2B…. a “Money Master”!

1. Focus on "why" instead of "how” of your goals:   Financial Independence is not a mystery.  Planning exactly how you will reach a goal, such as saving more money, can actually make it harder to reach that goal.  By focusing more on the reason behind your goal instead of the specifics of how it will be achieved can increase the likelihood of your success.  Theory is partly because having a more "abstract" mindset can help people deal with unexpected challenges that crop up along the way (as they always do).

2. Rethink your relationship with money.  For those of us that struggle making better money decisions, try thinking about money as if it's a person. "How's your relationship with Ben?" (as in Ben Franklin on the face of the $100 Bill).  We need to thoughtfully review our personal history with money.  Be honest with yourself and ask this question; “Is it good, bad or just ok”?   This history includes our financial situation growing up and patterns of our spending habits.  Write down your answers, habits and patterns as you see them.  If you don’t have a Budget, you should start one, NOW!  This is the very first step in fixing a dysfunctional relationship with money… acknowledge its existence.

3. Shhhh…  Protect your privacy.  When someone asks for your Social Security number, question if it's necessary to share it.  Never give it to a solicitor on the telephone or in an email.  Only give it to someone you can trust and even then you must verify exactly what they will do with this info.  Is it safe and secure?  If you ever see a suspicious charge on your credit card, follow up immediately with your card company, as it could be the first sign of identity theft.

4. Comeback Kid: Many people have struggled over the past few years, me included.  This doesn't have to be permanent.   Try being ruthless with yourself financially.  Cutting out "extras" in your budget will help focus on bigger financial goals, including getting out of debt.  Remember to follow your budget (yup, I said it again!) and pay off what you owe BEFORE acquiring more debt (unless it’s an unforeseen emergency)!

5. Future Self-Realization:  Visualize who you want to be financially in the Future.  Take this image and focus on it.  According to research from the Columbia Business School and University of Chicago Booth School of Business, “people that feel connected to their future identities are more likely to delay gratification.” The researchers offer a relatively simple way to do this: Take a moment or two to meditate on your future self, and just how similar it is to your current self.  Write down who you are now financially and how you want to look in the future.

6. Organize NOW!: Mounds and Mounds of paperwork.  You will need to hang on to important documents (some states require taxpayers to keep up to 10 years of filings on hand), but much of your old paperwork belongs in the trash or the shredder if it has valuable information on it, such as bank account numbers.  Store your most important documents (birth and marriage certificates, passports, etc) in an archival box or a locked metal file cabinet that's separate from your day-to-day files, or place in a Safe Deposit Box at your Bank.  Keeping all of your paperwork in one place can be step one to a better financial life. Set up a 3 Ring Binder, your “Money Master”. Use a new one every year to hold all your financial paperwork. Set up tabs for bank statements, Social Security benefits, estate planning, pension and retirement benefits, investments, and credit reports, etc. For those larger files (like receipts) have separate file Binders set up for them. 

7. Live below your means. Danny Kofke, a Teacher and Father of two, manages to live well on his $40,000-a-year salary.  In his book, A Simple Book of Financial Wisdom, he explains that he does it by following a pretty simple strategy: “Living below his means”.  He doesn't buy what he cannot afford, even when he wants to, and avoids debt at all costs.

8.  Partner Coordination:  Not talking about money is one of the biggest money mistakes couples make. Couples considering moving in together or marriage can save themselves a lot of trouble by talking about hot-button topics such as how to share household expenses, credit card debt, and anticipated future expenses.  Remember to bring up your long-term goals, too, which can make the discussion a little more romantic (swim with dolphins in the Bahamas? Backpack around Europe together?  A trip to Tuscany?)  Agreeing on common goals makes it easier to save.  Be very, very upfront, honest and clear with each other on how you view your goals both now and in the future.  As things change, be sure to communicate and re-evaluate.

9. Pick a better Bank.  There's no such thing as a “one-size-fits-all” regarding Banks.  Be financially savvy and do your own research to pick the best Banking fit for you.   Normally, larger Banks offer more ATMs and lower interest rates on Savings Accounts, while smaller Banks might be less convenient but offer lower fees.  Online-only Banks may offer higher interest rates, but lack that brick-and-mortar presence (you can’t walk in and deposit or withdraw your money). Check out this great comparison tool on www.FindABetterBank.com which makes it easy to search by ZIP code. Other websites, including www.Bankrate.com and Google Advisor, also offer free customized searches for you to use.

10. Auto-Save:  Online Banking makes this really easy:  Sign up for monthly transfers into your Personal Brokerage or Savings Account (such as ING Direct or Barclays).  You can also transfer funds directly from your paycheck so you never even see the money, which means you won't miss it.   Check in with your Human Resources Department—you might be able to set up an Automatic Savings Account through your paycheck in addition to your Automatic Retirement Savings (you do participate in this, right?  If not, sign up today!)

11. FREE TV!!: Network News, Primetime Series and even Cable Programming, the show you want can almost always be found online.   You can access a show by watching a short 30-second advertisement before the opening scenes, or a longer two-minute ad where a commercial break would normally be.  Not much to pay (except your time), considering that most of us watch ads anyway when we tune into our expensive cable channels.  Also check out Hulu.com, iTunes, and network websites. 

12. FREE TRAVEL!!:  Take advantage of Credit Card Reward and Airline Mileage Programs.   Actively seek out deals, surf the net and start layering deals on top of each other.  Stay organized and write these all down (be sure to print everything you need from your online searches).  Travel Agents can help with this as well!

13. All in the Family:  The Pew Research Center recently found that there are more multigenerational U.S. households today than at almost any point in modern history, with a total of about 51.4 million Americans living with relatives. That's about 16.7 percent of all Americans, the highest percentage since the 1950s (During World War II, shared housing was more common, with about 1 in 4 Americans living in a multigenerational household.) The report likens this phenomenon to an "anti-poverty program" that Americans are enacting to  insulate themselves from the dark side of the Great Recession.  But don't ruin each other's finances.  Older Parents are often pressed for cash, too, especially as they near retirement.  This means they have to watch out for their own finances.  Budgeting for any support can help, as can exchanging non-financial help, such as shared meals and networking advice.

14. Kitchen Connection: Jonathan Bloom, author of American Wasteland, states; “Americans waste at least 160 billion pounds of food each year”.  To minimize that, he suggests shopping more frequently and buying less on each trip.  Maintain an uncluttered fridge so you don't forget about items that will soon expire.  Also become a better cook. Sometimes you have to spend money to save money.  That is very true in the kitchen.  Invest in a few key pieces of cooking utensils to help you cook better, faster, and yes, even cheaper. Anything that makes your food taste better, gets on the table quickly and can lessen the temptation to order take-out.  Buy a slow cooker to make meals even easier (and delicious!)

15. Energy Conservation: Make little changes, like closing doors to unused rooms or turning off the air conditioner during the day, can make a serious dent in utility bills.  By unplugging appliances, turning off lights, and shutting down computers at night you can also save quite a bit.  TV’s also use power when they're turned off, so by unplugging them when they're not in use saves energy.  Invest about $30 in a power strip, called the Smart Strip.  This will automatically cut power to devices that don't need it when they're off, such as a DVD player, and maintaining power to those that do, such as a cable box.

Be sure to properly insulate your home and can save money on heating and cooling costs. Using a programmable thermostat so the temperature automatically rises (in the summer) and falls (in the winter) when no one is home during the day can yield annual savings of about 30%!  There are 25 million plus households own programmable thermostats, only half actually use them.

16.  Refinance:  Interest Rates are the lowest they have been in over 30 years!  NOW is the time to look at the benefits of refinancing your Home Mortgage.  Whether it’s for monthly savings with a lower Rate or debt consolidation, you should consult with a Mortgage Professional to see what you may qualify for.

Steven Goldman

Sr. Mortgage Loan Officer

Waterstone Mortgage

763.746.9921 office

763.202.8145 direct

SGoldman@WaterstoneMortgage.com

www.StevenGoldmanLoans.com