3 Common Financial New Year’s Resolutions

With Christmas only days away and the New Year trailing right behind many people are already making their New Year’s Resolutions.  And financial goals are usually high on the New Year’s resolutions list.

If you want to turn your financial life around in 2014 here are three common financial New Year’s resolutions and how you can turn them into a reality.

Pay off Debt

Those who have a large amount of debt know that it can feel like weights holding you down. This is why paying off debt is one of the most popular New Year’s resolutions.

If your goal for 2014 is to get out of debt here’s what you can do:

  • Create a budget
  • Choose a debt pay off plan (common ones are the snow ball method and the avalanche method)
  • Make your plan specific
  • Set weekly, monthly, and quarterly goals

The key to paying off debt is having a detailed plan that is also realistic. Paying off debt is hard but many have proven it can be done!

Building an Emergency Fund

Next in line for popular New Year’s resolutions is building an emergency fund. An emergency fund is a savings account that you stash away anywhere from 3-12 months’ worth of expenses for emergencies. This savings buffer would cover things like getting laid off from a job, unexpected car or home repairs (e.g. MDL water damage restoration), or unforeseen medical expenses.

The amount you need in your emergency fund will vary depending upon a few factors such as your job stability, expenses, and lifestyle. The less stable your job the bigger an emergency fund you need.

Just like with paying off debt you need a specific plan to build your emergency fund.

  • Create a budget
  • Commit to putting a certain amount of money toward your emergency fund each week

If you’d like to have a fully fund emergency fund by the end of 2014 just work backwards. For example, let’s say that you want to save $10,000. This means you need to save $833 per month or $193 per week. By looking at the weekly and monthly goals building an emergency fund starts to feel more real.

Buy a House

Third on our list for popular financial New Year’s resolutions is buying a house.  When it comes to purchasing a house you have to do much more than just save money. You’ll also have to secure financing and look at many homes before choosing “the one.” Be sure to check out Hudson home builders services if you have one already to help you in any house design customization of your choice.

You can use the same method for saving for a down payment as you did with the emergency fund. First figure out how much money you need and then calculate how much you should be saving each week.

You can also get a copy of your credit report to determine if there are any errors before applying for financing. That is the reason why your report must be up to date, as some irregular information may hurt your credit score. Check if there is any repaid debt still showing on your credit report, or maybe if there is an open account reported, even though you closed it months ago. Make sure to pay everything on time, as this will benefit your payment history and utilization ratio, which are two significant factors affecting your credit score.

Final Thoughts

All of these goals have two things in common. First you need a budget. Second you need a detailed plan. The more detail you put into your plan the more likely you are to actually achieve your goals.

What are your financial New Year’s resolutions?

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