Isn’t controlling your own money post-divorce fun? Seriously, there’s no arguing with an ex about whether you should either save for your kid’s education or pay down his student loans. No arguments about how, no, you can’t really afford those gifts for his family. There may be less money in your bank account, but it’s yours.
As you’ve grown more confident managing money post-divorce you’ve probably started dreaming. A new car. A house or condo. Or, paying down debt and legal bills.
What are your financial goals in the new year? Last year, I sold my house and moved into an apartment. But I’m seeing signs in my area that the condo market is about to tank and I don’t want to flush my rent money down the drain forever. I’ve decided to keep my eyes peeled and be ready to scoop up a deal. I also want to finish paying off my legal debt.
As we make resolutions, set goals, and create intentions for the new year, it’s only natural to include some that are money-related. If you’re planning for your next big purchase, here are some steps to make that dream come true.
I’m a planner. I have spreadsheets. My spreadsheets have spreadsheets. At the beginning of the year, sit down and evaluate your financial situation. Where do you owe money, and what’s the interest rate that you’re paying on that debt? Can you trim costs anywhere?
Order your debt from most expensive (highest interest rate) to least, and then make a plan to start paying it off. How much can you set aside each month? Where do you want to send that money? Get very clear about your priorities and be honest with yourself about your plan. There’s no use putting together a budget that you won’t stick to!
Since my goal is to pay off my legal debt in a year, I divided the total amount I owe by twelve, and that’s how much I’m paying off each month. Since I have multiple financial goals for this year I pay only that and put the rest of my disposable income into my savings account for the condo’s downpayment.
Look into what you can sell, like your old wedding ring, to move that plan forward faster.
Do you owe money on your credit cards? If you’ve always paid on time, and have a long history with the company, call and ask for an interest rate reduction.
Credit card companies don’t just make money on what you borrow; they make money on credit card processing fees. Every time you swipe your Amex at a merchant they have to pay American Express a percentage or a flat fee (usually around 20 cents). And they know that if you have a lower interest rate on their card, you’ll use it more. They’ll make money on the processing fees even if they’re not making as much money on you.
Shaving a couple of points off your interest rate can save you hundreds of dollars and shorten the amount of time it’ll take you to pay off those balances. Pick up the phone and call. The worst they can do is say “no.”
While a plan is necessary and can help you feel more in control of your financial situation, don’t budget every penny. Leave some wiggle room for unexpected emergencies – like a new car purchase that becomes necessary sooner than expected. And if you get off track, don’t beat yourself up, just take a deep breath and readjust the plan.
If you plan your budget too tightly and don’t allow for any fun, it’s only human nature that you’ll rebel. So build some nights out with girlfriends, or a shopping spree, into that plan. It’s kind of like dieting – if you’re too strict, you’ll wind up shoving peanut butter cups into your mouth at 4 am.
Auto-savings withdrawals are a thing of beauty. I have $25 a month taken out of my checking account for my son’s college education. I know it’s not much, but it’s something. If you tend to spend everything in your checking account, set up automatic transfers to a savings account. Or have your direct deposit split between two accounts. Savings accounts have a legal limit of six withdrawals per month, so putting the money you’re trying to save for your goals in an account that’s more difficult to touch is a good idea.
There are apps which will round up all your transactions when you buy something using your debit card and deposit the change into a linked savings account. Look into Upromise, a rewards site that gives a percentage back for your child’s college education.
I love clothes. Right after I made my new year plan, the whole world went on sale. All my favorite retailers sent me emails full of gorgeous clothes. I deleted them unread (okay, I opened one, whimpered, and then deleted it). Because I know what I want out of the coming year, and it’s more than a new dress.
Like dieting, it can be easy to lose sight of your goals. Create a Pinterest board with room ideas for that house you want to buy. Clip pictures of travel destinations out of magazines and put them up on your fridge if you’re trying to plan a trip. Make a weekly date to check in with your budget, and your plan, and see if you’re still on track.
Planning for, and reaching, your next big financial goal requires dedication and discipline. I’d love to hear what your financial goals are for the new year, share them in the comments or in our Facebook group! And, at the end of the year, let’s all see how we did.
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