Things I've Done and Learned In My Endeavors to Financial Successful:
1) Higher Interest Savings with bi-weekly auto deposits- I started a higher interest bearing online savings account with INGdirect and declined to have a debit/atm card linked to it. This is perfect for me. The money is automatically deposited into the account on pay day so I don't even really see it. I don't have immediate access to the money so it makes it more of a hassle to get the money, and therefore less of a temptation to spend it. ** Consider designating a comfortable portion of your direct deposit to a savings account so it's immediately out of sight and where it should be...saving and earning some interest! (everyone should have direct deposit and everyone should have an account with a financial institution! no live checks in this day and age!!)
2) Paying down revolving debt/outstanding debt- Yes i do fairly well for myself as a young attorney, but yes, I'm single, I have two expensive @ss kids, and live in one of the top 10 expensive areas so despite all that doing well for myself my budget can be as tight as those jeans I had on this weekend so I know how challenging this particular task can be. What I did to make it easier to swallow and to manage without getting discouraged and giving up is set a reasonable budget of how much of my monthly income would go towards my total debt. You can try to set your goal in terms of percentages of your income (10% of my income is going to go towards debt) or an actual set amount (every pay period I'm going to put $100 in my debt bank). And you can either wait until you reached a certain amount (let's say every $500 you accumulate) and make a lump sum payment towards a specific debt or what have you, until you have paid everything down. **Consider the months when you get an extra pay check (for those who get paid bi-weekly there are 2 months in a year where you get 3 pay checks instead of 2) and how you want to delegate that "extra" pay. It would be really helpful in cutting a chunk out of a high interest debt!
3) Adjusting my tax deductions so that I get the majority of my income up front rather than trying to get a huge tax check at the end of the tax season. I know a lot of people look forward to the tax season and tax returns to use any monies refunded to them to get ahead and pay off debts and I'm not saying not to do that, but you do need to understand that the money you receive in a tax refund is exactly that... a refund of your money, meaning that the IRS has been holding on to money that is rightfully yours throughout the whole year, interest free, to return to you once your tax return is filed and it's found out that too much of your money has been withheld. I'd rather get all of MY money up front for me to designate what to do and not to do with MY money! And I rather have the income to take care of what I need to take care of as it becomes due or needed rather than incur additional expenses, fees, and headaches b/c I don't have the income to take care of it until the end of the year. So, my deductions are set up so that I basically break even. The IRS is happy, I'm happy, my savings are happy and my creditors are happy all year around, not just around tax time. **Consider making any adjustments if you find that during the year you're having a hard time making ends meet and playing catch up during tax time.
4) Flex Spending Account- This has been a complete God send for me. A flex spending account is an account you set up to be managed by your employer or what have you and allows for you to save a designated amount of money, spread out evenly over your pay periods for the year, before taxes, for qualifying health care expenses and dependent care expenses. I used Flex Spending this year to pay for my Invisalign treatment (oh yea my teeth are about to be perfection again...I got a separate post for that). You end up saving because you reduced your taxable income, and therefore your tax obligation. It makes it easier for you to pay fixed or known expenses b/c it's automatically deducted from your pay without you ever having to think about it or account for it and you actually end up having more of your money in hand than you would if you paid the same expense out of your net income rather than with a deduction pre tax. I ended up saving $20 per pay period for a total of $520 this year for my Invisalign treatment! Next year I'll be doing the same for LASIK vision treatment. If your employer offers flex spending please take advantage of it!
5) 401K or similar retirement savings fund - This too helps to reduce your taxable income and therefore, tax obligation because the designated amount is deducted from your income before taxes are assessed. Obviously the benefit of saving for your future goes without saying. Additionally, many employers match the amount you contribute so if your employer agrees to match up to 5% of what you contribute, then if you designate 5% of your income you end up earning/saving 10%! You double your money!
6) 529 College Plan-I haven't started this yet and still have some questions but from what I know, this is a tax beneficial college savings plan that allows you to save money for your children or other qualifying individuals (nieces, nephews, etc) with very generous tax benefits and the amount saved is not counted against the beneficiary when assessing Financial Assistant eligibility. This is something that all parents should look into and consider opening.
|It can be difficult to balance but with time, practice and determination....|
|... you'll get the hang of it and it'll become easier and more rewarding!|
|Duhhhhh Winning!!! :-))|
|The END! I'm fly, happy, and financially savvy!!! Milk and Honeey|