Coming from someone who was up to her eyeballs in debt this time last year, I don’t feel like I’m really in a place to give advice on money. At the same time, I have learned so much from getting out of credit card debt and finding ways to make sure I never put my little family in that position again. So, here are five things that I’m doing this month to be financially ahead and prepared for the new year and recommend to anyone looking for some extra tips and tricks!
1. Get ahead with the extra pay period. For those of us getting paid bi-weekly, December magically had three pay periods, which is one extra then we are used to getting in a month. Instead of looking at that “extra” paycheck as fun money to spend, we paid off the rest of Christmas and put the rest of it in savings. It feels nice to start the new year by having a stronger emergency fund and not having any Christmas debt. By changing our perception of that extra paycheck (not for extra spending) we are able to prepare for any unexpected expenses we have coming up in the new year.
2. Start preparing for taxes, now! I used to work in HR and I know that W-2 forms are being prepared to be sent out in the next couple weeks. Be ready! We use Turbo-tax and every time we get a new W-2 form or other tax forms, I update it on Turbo-tax right away. We want to be able to submit our taxes ASAP so that we don’t have to scramble at the end of March.
3. Look ahead and set aside. We know that our car will need an oil change in about a month, so instead of letting that expense sneak up on us, we decided we would make a “sinking” car fund. A sinking fund basically means a fund formed by putting money aside periodically for something you need to pay for eventually. We set aside 30 dollars in CASH every month in an envelope for our sinking car fund. So, when I bring in my car in for an oil change, the money is already set aside and ready to be spent.
The cash part is important because by having it set aside in cash, it can’t be accidentally spent on something with a debit card. Let’s be real, I am one of those people who walk into Target to get a gallon of milk and come out with milk, a candle, some fuzzy socks and a new toy for Rosie because I saw them on my way to the milk aisle.
4. Organize Bills- If you are a paper planner kind of person, I highly recommend printing off this bill payment tracker from One Beautiful Home. If you are more of an electronic person, I recommend the Mint App or using an excel spreadsheet! With credit cards, student loans, rent, utilities and various other bills, it can be really easy to lose track of when each payment is due. This helps me keep track of all our bills, when they are due and how much I need to pay for them. Love it!
5. Set SPECIFIC Goals-Goals can be touchy subjects because some people get discouraged if they don’t meet them or don’t think that by setting a goal will really do much for them in the long run. When we were working on getting out of debt, we would constantly set goals that most of the time we didn’t meet, such as: “We will have this credit card paid off by April” or “We will use this leftover money to pay off the dentist bill.” Often, life would get in the way or I would make a terrible judgment call and spend that money somewhere else. However, by always having a goal, I knew what we were working towards and even if we didn’t meet it right on time, I had still made progress towards meeting that goal. Even if that credit card didn’t get paid off by April, we had worked towards that goal and were that much closer to having it paid off by May! Set goals and work on meeting them. Don’t worry if you don’t meet them on time, just have something to constantly work towards.
Dustin and I have been out of credit card debt for a couple years now and it took a long time, a lot of sacrifices, a couple of moves, and a few tears, but it has been so worth it. We only have to worry about student debt from here on out!
What financial goals do you have this year?