The New Year is a great time to create financial discipline, pay off bad debt and get a financial do-over
This post is a weekly roundup of the best personal finance advice from around the web. I follow a lot of the personal finance bloggers on the internet and select the best posts every week for this roundup. I’ve summarized the posts below but there’s still a ton of detail within each article. Click through to the posts and be sure to tell the blogger where you heard about their blog.
I’m always looking for new blogs to follow in crowdfunding, peer lending and personal finance. Let me know if you find one worth following.
Creating Financial Discipline
Jason gives it to us straight with 9 tips to create discipline with money. It’s tough for most to hear but your money problems probably don’t come from not having enough money, it’s a problem of what you do with it.
- Get Mad – I love this first tip and it’s so true. Sometimes to break those bad habits, you have to get mad at your situation and what led you there.
- Stop using credit, period. While I’m an advocate of responsible use of credit, some people are just better off avoiding it. If you can’t control your spending (be honest) then cut up those cards!
- Understand money – read financial books and those that will help you understand the good habits you need to create
- Make a plan! Everyone says they need to follow a budget but few actually do it. Those that begin a budget often drop it after a month. I usually recommend setting a goal of three months to follow your budget. Follow it for that long and there’s a good chance you’ve created some of the financial habits you need.
Life after Debt Payoff
One stat jumped out at me as soon as I opened this post. Lisa cites a survey that shows 28% of Americans have credit card debt that exceeds money they have in a savings account! Wow!
But what happens when you’ve diligently saved and paid off all your debt? Few blogs talk about what to do after debt.
- Plan, and feel free to make big plans – Being debt free could mean extra money to live a little nicer. Obviously you want to fulfill your saving goals but go ahead and treat yourself once in a while. You earned it.
- Reassess your financial goals and the saving you need to do – Now that you’re debt free, you might be able to save a little more and reach a little higher on your bigger plans for the future.
Paying off debt doesn’t have to mean debt free. Understand the difference between good debt and bad debt and how to use it as a financial tool.
Financial Goals for 2016
2016 is getting close and you’re going to start seeing a lot of these planning posts…but how many do you really take seriously and follow? Kali offers some great advice here so don’t blow it off. You don’t have to completely reinvent your financial self next year but set a couple of goals and stick with them.
- Establish financial security – You’ve absolutely got to have at least three months of expenses in an emergency fund. You’ve worked hard to get out of debt and achieve financial success. Can you imagine if one little thing beyond your control set you all the way back to zero?
- Build your wealth – this one’s pretty broad so make specific goals like maxing out your 401K or investing 15% of your income
- Use money goals to live the life you want – financial responsibility isn’t just about saving and sacrificing. Have fun and make sure you enjoy yourself as well. It will make your budget and goals all the easier to follow.
Boost your Credit Score
Kurt posts the fifth installment of his Boosting your FICO Credit Score series. The post talks about credit inquiries and new credit, and how they can hurt your credit score.
- Credit inquiries, requesting credit from someone, stay on your credit report for two years and too many can drive your score lower. That’s because people can get the impression that you’re feverishly looking for money. In my conversations with investors in peer lending, I know a lot of people that will not lend to borrowers with more than two credit inquiries in the last six months.
- While you’ll need to use credit to build your credit score, opening new credit accounts can also lower your score in the short-term. Use credit responsibly and avoid opening credit lines you don’t really need.
I’ve followed Kurt’s series and see a lot of the same strategies I used in my step-by-step process to fixing my credit score fast.
Turning a Hobby into an Income
Melanie passes the two-year mark with her blog and relates her story of debt hopelessness to turning her hobby into a source of income. Building a blog, or any hobby, into a business is a tough one but so worth the effort.
- Reaching out to people you admire and learning from them
- Put in the time – Melanie often worked 16 hour days when she was working a full-time job and growing her blog
- Deliver quality work and ask for more
- Check out this How to Make Money Directory of jobs you can do from home
It was a busy week for personal finance blogs and some great advice here on paying off debt, earning extra cash and generally creating a better financial future.