By Warren Littlefair – Peard Finance General Manager.
WOW – Can you believe we are into the third month of the year already?
To most of us it seems like we have just got over the Christmas hangover, got a small suntan and forgotten about all the new year’s resolutions we promised ourselves we would stick to this year. Remember those ones? Lose weight, go on a holiday, buy a new house, save more, pay down debt… Feeling a bit guilty now? I know I am. I think I failed at all of them or at the very least got them around the wrong way. Hmm, gain weight more like.
The time most of us think about our new year’s resolutions is, well, new year. By January 3 they are out the door until you roll out the same ones on, let me guess, December 31.
Why do most of these fail, you ask? Frankly most of them are just a thought bubble without putting any plan into place about how you are going to get there. It’s a bit like turning up to the airport to go on a holiday and you haven’t booked your tickets. It’s just not going to happen.
Let’s turn this around back to finance. We’ll start with the easy one. OK, it’s actually the hardest one. Pay down debt. The starting point for this one is to work out how much debt you have, what sort of debt it is and how long it is currently taking you to pay it off.
Here’s a bit of a tip – look at your credit cards first. Concentrate on paying the smallest debt off first. Cut the card up. Then move onto the next smallest one. Just make sure you are still making payments on your other debts. As you pay one debt out, don’t spend the spare money but put it towards your other debts. Soon you will have a couple of debts out of the way and be in a position to put some decent cash towards your larger debts. It sounds easy but you need to keep disciplined to do it.
Next up, buying a new house. This is a pretty hard one to work out but can be easy in the same breath. Work out what you need in a house – OK, and what you want as well. Then work out if you can afford it. If you can’t afford it then you need to either lower your expectations a bit or find some more money.
Now you know what I’m saying when I said it is a hard AND an easy decision. There’s no point wasting years looking for the perfect house you can’t afford. Set yourself a time frame to find what you are after. Many people waste time looking for the perfect house, waiting for the perfect house etc to wake up one day and have never got anywhere with their plans.
Save more. In theory this should be the easiest of all, but in reality is one of the hardest. Set small targets to start with. Don’t bite off a huge savings goal if you are never going to meet it. There’s no point wanting to save $20,000 in a year when you earn $25,000 a year.
So make the savings target achievable, be honest with yourself about how much you can save each week and stick to it. Put it into a bank account you don’t have instant access to. Look at it grow and be proud of your achievements. Next, on to the last new year’s resolution – losing weight! Sorry but I have absolutely no advice on that one.
Good luck with the financial goals and hopefully you won’t be having the same conversation with yourself on Jan 1!