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With new year, it’s time to think about how to do it better

12/24/13 | By Chip Gordy, MBA, CRPC

As we get ready to start a new year, it’s a good time to push forward and think about all the things you’d like to do better or differently in 2014.

As part of your planning for this year, consider taking action to improve your personal finances. To get started, here are some goals for 2014 and how to achieve them:

Stick to a budget. You should know exactly where your money’s going and where you might make improvements. I’ve written about this before, and once you get started, it’s not too difficult. What’s not so simple for some? Following through! If you want to break out of the cycle of living paycheck-to-paycheck and learn how to spend within your means, keeping a budget is a smart first step.

Pay off debt. There are many strategies out there to help you cut away your debt. You can start by paying down the debt that has the highest interest rate first and then work your way down. Just make sure you’re still making at least the minimum payments on your other credit cards and loans.

Manage your credit. Your credit is more important than ever. It’s absolutely vital to getting the best interest rates and terms for credit cards, home loans and auto loans. If you have poor credit, you may not be able to qualify for credit at all in this economic environment.

The first step to managing your credit is to check your credit report at least every three months to make sure what’s there is accurate. Staying on top of your credit doesn’t have to cost you a thing either. Many credit companies will give you a free credit report.

Save more. Assume you’re depositing $250 per paycheck toward your savings. Maybe you could find a way to increase your savings contribution to $350 per paycheck. Look for ways to possibly cut unnecessary expenses. If you need a big-ticket item, do your research and look for sales. You can find ways to save more if you look for them.

Pay yourself first. This simply means that you need to save before you spend. A good way to do this is by setting up direct deposit from your paycheck into a savings account. This accomplishes two things: first your deposit is automatic and it’s almost like paying a monthly bill. Second, your deposit will hopefully go into an interest-bearing account or savings vehicle, and you’ll be less likely to spend it.

Save for retirement. Here’s another case where direct deposit makes it easy and effortless to save for your future. And if you’re lucky enough to work for a company that matches your retirement contributions, take advantage of it! If you don’t, you’re essentially losing free money.

Get the proper insurance. If you have children, life insurance is, of course, imperative. A good rule of thumb is to have a policy with a benefit of seven to 10 times your annual household income.

Happy New Year!

– Chip Gordy, MBA, CRPC is a financial advisor with Coastal Wealth Management, LLC, 10441 Racetrack Rd, Unit 1, Berlin, MD, 21811 and specializes in wealth and retirement planning. He can be reached at 410-208-4545 or Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Advisory services offered through Cambridge Investment Research Advisors, Inc.  

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