Wednesday, December 26, 2007
Resolve to be Financially Fit
After the caloric indulgences of the holidays, one naturally turns to thoughts of fitness and a better diet. Likewise, after the financial excesses of gift buying and overspending, thoughts of a balanced budget and financial fitness become New Year’s resolutions.
Before jumping into a successful physical fitness program, one must define measurable goals; lose 10 pounds, lower cholesterol by 50 points, lower your heart rate or drop 3 inches from your waistline.
Once you have established your goals, you will never have a problem finding or creating a plan that enables you to reach them.
Open any magazine or newspaper, especially after the holidays, and you will find every kind of diet and exercise plan possible. (Of course whether or not you follow these carefully laid plans, is another matter.)
What about financial fitness plans?
Just like the diet plan, it is necessary to define measurable goals.
Debt retirement. Prioritize your debt. Plan to retire the most expensive debt first. There is good debt and bad debt. Mortgage interest can be deducted. High interest credit card debt just accumulates. Avoid charging anything that you can’t pay off at the end of the month. If you can’t pay off the balance, always pay more than the minimum amount due. If you are not paying towards the principal, you will never pay it off!
Create a budget. The primary goal is to bring in more than you spend. It helps to live below your means.
Savings. If you are self employed you must set money aside for Uncle Sam first and don’t forget the rainy days! Most financial planners recommend saving cash equal to 6 months of living expenses.
Wealth Building. Buying a new home or improving the one you have is always a great way to build wealth. It’s never too early or too late to plan for a second home or rental property. Additions to your investment portfolio are especially beneficial when prices and interest rates are as low as they are today. Rental properties are great sources of passive income.
Income. There are two types of income, passive and active. Active income eventually tops out. There are only so many hours in the day. There is only so much time you can spend making money. On the other hand, passive income works for you while you are sleeping.
Financial fitness resolutions are a matter of Good Home $$s and Sense.
Before jumping into a successful physical fitness program, one must define measurable goals; lose 10 pounds, lower cholesterol by 50 points, lower your heart rate or drop 3 inches from your waistline.
Once you have established your goals, you will never have a problem finding or creating a plan that enables you to reach them.
Open any magazine or newspaper, especially after the holidays, and you will find every kind of diet and exercise plan possible. (Of course whether or not you follow these carefully laid plans, is another matter.)
What about financial fitness plans?
Just like the diet plan, it is necessary to define measurable goals.
Debt retirement. Prioritize your debt. Plan to retire the most expensive debt first. There is good debt and bad debt. Mortgage interest can be deducted. High interest credit card debt just accumulates. Avoid charging anything that you can’t pay off at the end of the month. If you can’t pay off the balance, always pay more than the minimum amount due. If you are not paying towards the principal, you will never pay it off!
Create a budget. The primary goal is to bring in more than you spend. It helps to live below your means.
Savings. If you are self employed you must set money aside for Uncle Sam first and don’t forget the rainy days! Most financial planners recommend saving cash equal to 6 months of living expenses.
Wealth Building. Buying a new home or improving the one you have is always a great way to build wealth. It’s never too early or too late to plan for a second home or rental property. Additions to your investment portfolio are especially beneficial when prices and interest rates are as low as they are today. Rental properties are great sources of passive income.
Income. There are two types of income, passive and active. Active income eventually tops out. There are only so many hours in the day. There is only so much time you can spend making money. On the other hand, passive income works for you while you are sleeping.
Financial fitness resolutions are a matter of Good Home $$s and Sense.
Labels: Financially fit, resolution
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