This holiday season is a good opportunity to take control of your personal finances. Here is your road to financial success:
Write down all of your debts (including money owed to friends and family members) from smallest to largest. (See www.suzeorman.com for additional tips.) Write down all of your assets and liabilities to obtain your net worth.
Review your life insurance policy to ensure that you have at least 10 times your salary. If you do not have life insurance, obtain a term life policy for a 20-30 year term. (See www.zanderinsurance.comor rates.)
Prepare a monthly budget (written or electronic). This budget will include all of your anticipated income for the month of December. It also includes all of your expenses too (including what you plan to spend for the holidays – gifts, travel, food, cards, stamps, decorations, etc.). You can find an online budget at www.daveramsey.comorwww.josephsangl.com or IwasBroke.NowI'mNot.
Since next month is the holiday season, prepare a small budget for the holidays. After you have completed your monthly budget, you should know exactly how much you have to spend on the holidays. I suggest that you withdraw the CASH from the bank and only spend that amount. If you need to purchase something online, you can then use your debit card or purchase a pre-paid card.
Before you begin to pay down your debt, create a small emergency fund of $1,000. This should be placed in a separate savings account or money market account that is easily accessible. Cut up your credit cards and begin paying off your debts (except your house) from smallest to largest by using the debt snowball described on the Dave Ramsey website (www.daveramsey.com.Once your debt is paid off, build your emergency fund to cover 3-6 months worth of expenses.Invest in a retirement fund and save for your children’s college fund (ESA or 529).Pay off your home early.Build wealth through investments, real estate, no load mutual funds, stocks, etc.