Whew! 2010 has been a rough year for all of us, but luckily you’ve managed to make it through the last stretch–the gauntlet of holiday spending and post holiday debt blues–out to the other side safely. There’s light out, you can breathe again and it looks as if there’s infinite potential waiting for you in 2011.
But wait, it’s dangerous to wander out into the vast 2011 unarmed. You’ve got a whole year to plan if you want to clean up your personal finances. You want to make sure you have enough money to fund your shopping hobby. Here are a few tips to get you started on revitalizing and sustaining a more financially stable new year:
1. Track your spending
Your plan begins with a budget. Creating a budget is a simple and fundamental task when on the road to personal financial recovery, but it requires ruthless honesty. Take some time to gather up receipts and write down what you typically spend on groceries, cappuccino, petrol, gadgets and computers etc., not what you project you will spend. Once you’ve written out your budget, you can then plug those numbers into online money management tools to track your spending. Remember, you can’t change if you don’t know what to change
2. Squash the parasites
You know what I’m talking about. Those activities and habits that are slowly leeching your resources—somehow you were convinced it was a two-way street. Whether it’s smoking, the mate that crashes on your couch and eats all your cereal or your 7 day a week fast food habit, there’s something you can cut down on. The key to sustaining your New Year’s determination is keeping your actions simple and modest. Try putting that Miele oven in your kitchen to use maybe once a week or cutting down to half a pack. The key to reaching goals is small steps.
3. Be prepared
The best way to fall back in the hole is to ignore gravity. Huh? What I mean is, like gravity, setbacks are reality. You won’t see it but it’ll be there, and you’ll be flat on your bottom. Being prepared is an easy thing to forget during periods of levity once your budget starts working; out of nowhere your car may break down or your new Daewoo fridge freezer may just crap out on you. Any little bit stashed away will help but ideally you should try to save about 3 months worth of living expenses to be properly prepared.
4. Reduce your debt
Once you’ve got a measure of control going on in your day to day life, start chipping away at that chunk of debt. Get your free credit score so you know what you’re working with and start paying off your debt with the highest interest rate. Don’t look for easy pats on the back, just wade in there and get it done.