Spring has sprung and the forecast for financial stability reveals that the economic barometer shows a rise in the cost of living, especially for retirement and health care. This means it is time to put the chilly economic climate behind us, clean out the consumer spending cobwebs, dust off the debt and spring clean America’s finances.
With recent reports that half of all American families are carrying more than $25,000 in debt and the total amount of consumer debt in the United States is at nearly $2.46 trillion dollars, most people want to sweep their money troubles under the rug – a financial spring clean is just what this country needs.
1) Pay down your credit card debt: First, make a budget. “Where does all the money go?” By setting a budget you can stop frivolous expenses and redirect the money you save to pay down debt. Next, get another job. I know, this doesn’t sound like fun. But having more money will aid you to reduce debt more quickly. Third, sell stuff. The Internet has proven that everything is worth something. Go to eBay, Craigslist or Kijiji – you’ll be amazed at the market (and the asking prices) for this and that. Don’t be surprised if you have a few hundred dollars – or more – sitting around your house or in your garage. Finally, keep the real goal in mind. Building wealth, not reducing debt, should be your ultimate objective.
2) Build an emergency fund: Consider adding some money to your own slush fund. Given the uncertainty of the economy and jobs nowadays, you should always try to maintain a minimum of three to six months worth of living expenses in a savings account, money market account or CD in case of an emergency.
3) Fund an IRA: If you have some years before you retire, consider starting or investing money in a Roth IRA. Any earnings grow tax deferred inside the Roth IRA and distributions are tax-free when you take money out. Check with your tax preparer for distribution rules and regulations please.
4) Set S.M.A.R.T Goals: Are your financial and retirement goals well-defined? In developing your financial goals, make sure they’re S.M.A.R.T. …
For example, say you want to save $10,000 by Dec. 31, 2010 for your wedding. To do this you must set aside $1,000 per month or $500 from every paycheck. To accomplish this you will reduce the number of times you go out dinner each week and will trade-in your SUV for a smaller, more fuel efficient model by April 30, 2010.