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Growing Forward: Day 10 – Moving Forward With Money Management

Today we look again at how to finance our Dreams. One of the most frustrating scenarios in life is to know God hs called you to accomplish some task and then discover that you do not have enough financial resource to complete it. You may view the video and/or read the information below.
Below you will find helpful information from www.wallethub.com and Dave Ramsey

Consider these tips towards helping the forward progress towards better money management.

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Financial Insights For 2016

    1. Snowball Your Debt (more info here) When you were a kid rolling a snowball in the backyard, the best way to do it was to pack some snow into a tight ball, then start rolling it through the yard. Your snowball would become a snow boulder much quicker than it would if you just built it up by hand. That’s exactly how the debt snowball method works.The debt snowball is perhaps the most life-changing Baby Step you’ll experience in your total money makeover. Once you’re on Baby Step 2—that means you are current on all your bills and have your $1,000 starter emergency fund saved up—list your debts smallest to largest by amount owed. Don’t worry about interest rates. We don’t care if one debt has a 2% rate and another one has a 22% rate. 

      Now it’s time to make progress.

       

      Pay minimum payments on all of the debts except the smallest one then attack that debt with a vengeance. We’re talking gazelle intense, sell-out, get-this-thing-out-of-my-life-forever energy. Once it’s gone, take the money you were putting toward that debt, plus any extra money you find, and attack the next debt on the list. Once it’s gone, take that combined payment and go to the next debt. Knock them out one by one.

    2. Get Reacquainted With Your Finances & Reassess Your Priorities: The first step toward financial improvement is to get the lay of the land. That means carefully reviewing at least one of your major credit reports, in addition to checking the status of all your financial accounts, taking stock of your assets and debts, and evaluating your monthly cash flow.
    3. Sign Up For Credit Monitoring: It’s quite stressful to be a consumer in this day in age, with our new digital economy spawning unfamiliar financial threats and extending the timeframe for vigilance well beyond traditional banking hours. But new tools have also emerged to ease our transition to this new 24/7 personal finance environment, and credit monitoring is among the most helpful – especially since WalletHub offers a 100% free option.Credit monitoring is essentially a surveillance system for your credit report, notifying you anytime key information on your file changes. It therefore increases the odds that you will find out about any administrative errors or suspicious activity before it can cause much damage. The biggest thing to watch out for is the frequency with which the underlying reports that are being monitored get updated.
    4. Implement The Island Approach: The Island Approach (more info here) is a personal finance technique based on the theory of compartmentalization that encourages consumers to isolate different financial needs on different financial products – as if they are a chain of related islands. For example, this might entail getting one credit card for everyday purchases that you can pay off in full by the end of the month and another for revolving debt.Doing so will enable you to get the best possible terms on each card (i.e. a great rewards earning rate on your everyday card and an extended 0% term on your debt card) rather than compromising for middling terms on a single card. It will also help you reduce the cost of your debt, since everyday purchases won’t be inflating your average daily balance, and garner valuable perspective on your finances – if you ever incur interest on your everyday card, you’ll know you spent too much that month.
    5. Automate As Much as Possible: One of the most easily avoidable mistakes that people make in regards to their finances is missing due dates. Often due to pure forgetfulness, tardiness can have serious ramifications on your financial life – such as missed credit card payments fostering credit score damage.Luckily, avoiding such a negative event is as simple as setting up recurring monthly payments from a checking account. You can do so for your full balance, the minimum amount required or a customized amount, and this applies to a variety of different types of bills – from credit cards to cable. Of course, you’ll have to remember to review your monthly statements in order to avoid being overcharged or missing a sign of fraud, but you’re not on the clock for that like you would be with payment.For more help keeping your payment train on schedule, check out our 8 Tips For Never Missing A Due Date.
    6. Build An Emergency Fund: Roughly 56% of Americans do not have a rainy day fund, according to the Financial Industry Regulatory Authority’s National Financial Capability Study. Like someone without insurance, folks who lack an emergency fund are merely tempting fate and putting themselves at risk of financial catastrophe in the event of prolonged job loss or significant emergency expenses. Building up some monetary reserves should therefore be one of the first orders of business for any financial makeover.An emergency fund is for those unexpected events in life you can’t plan for. Whether there’s a plumbing issue and everything but the kitchen sink is draining, or your brakes are squealing at every stop sign, you can be ready!The goal is to save $1,000 as fast as you can. Go through your storage boxes and sell some stuff. Work an extra job. Do whatever it takes to start saving money. Once you have it, open a checking account that is separate from your regular account and put the cash there. When a car battery goes out or a baseball meets a window in your house, you won’t have to go into debt to fix it. You don’t want to dig a deeper hole while you’re trying to work your way out.While we recommend ultimately building a fund with about 12-18 months’ take-home income, it’s important to understand that won’t happen overnight. As a result, you needn’t put the rest of your financial life on hold until your emergency fund is complete, but rather chip away at it over time. That is key because we actually recommend creating a 6-month safety net before beginning to even pay down your debts in earnest. Doing so will help ensure that you do not end up right back where you started upon finally reaching debt freedom.

      “Just as you might dress for success, spend for failure,” said Scott C. Hammond, a clinical professor of management at Utah State University. “Assume you will go 6 to 12 months every ten years without a pay check. Save accordingly. Live on a budget. Store a little food. Have a solid savings account with liquid assets.”

    7. Improve Your Credit Score: In case you weren’t aware, the annual difference in cost between good and bad credit is roughly $650 in credit card payments, $1,400 on your auto loan and $2,300 on a mortgage. The savings inherent to good credit extend well beyond that as well, considering that your credit standing impacts your insurance premiums, your ability to buy a car or rent an apartment and the types of jobs you can get – in addition to the loans you’re eligible for.The best way to improve your credit is to maintain an open credit card account that is in good standing. The card will then report positive information to the major credit bureaus each month, either building out your thin credit profile or helping to devalue mistakes from the past. You don’t have to get into debt to benefit from the credit building capabilities of a credit card, unlike with a loan, and you don’t even need to make purchases with your card. If you don’t have the credit standing necessary to qualify for a normal credit card, you can always place a refundable deposit on a secured credit card and benefit from what’s tantamount to guaranteed approval.You can get your free credit score, updated daily, by signing up for WalletHub. This will give you an accurate sense of your starting point and enable you to track your progress over time.
    8. Save 16% More Than You Would Normally: Most people are pretty good at wasting money. Many of us don’t have budgets or emergency funds; we rack up expensive credit card debt by the billion; and we prioritize short-term desires over long-term needs. After all, 1 in 4 people nearing retirement age have absolutely no money saved up, according to the Federal Reserve. Well, why don’t we take some steps to change that in 2016?Retirement obviously isn’t your only savings need. You also need to save for college, weddings, vacations, etc. The best approach to meeting all of these savings needs is to establish separate accounts for each, which you fill with automatic monthly contributions from a bank account. This gives you some useful perspective on each of your goals and enables you to better track progress. Your goal for the year should be to boost the value of each of your accounts by 15%. This will obviously take hard work and sacrifice, but figure out how much you’ll need to put away each month in order to meet that goal and get cracking.
    9. Give Back To Charity: Charitable giving is beneficial in terms of self-perception, tax liability and basic humanity. Perhaps that is why monetary donations totaled more than $358 billion in 2014, according to data from Giving USA and Indiana University. Even though that represents a 60-year record, we should make it our mission to be even more benevolent in 2016, with a special emphasis on donations involving money rather than time.Why? Well, most people can actually make a bigger impact on charities by spending extra time at work and donating cash than by volunteering, according to WalletHub’s Charity Calculator. More specifically, the average American – who earns $30,176 annually and volunteers one hour per week – would be able to donate more than 8,350 meals to hungry children, provide roughly 2,040 measles vaccinations or give nearly 170 refugees a year of clean water just by working an extra hour instead of volunteering, and then donating the proceeds. Unless you’re the Iron Chef, you’re probably not going to cook over 8,350 meals in 52 hours!
    10. Do Your Taxes Early: Up to 25% of Americans wait until April to file their taxes each year, according to the IRS. As with anything else, procrastination breeds mistakes and 2.6 million people made math mistakes on their taxes in 2013 – the most-recent statistics available. Many people also end up filing late and underpaying, incurring expensive penalties along the way. Starting your tax prep early is the best way to avoid these unfortunate events, not to mention lowering your stress levels. Not only can getting organized take a considerable amount of time, but foresight will also enable you to adjust your withholdings in order to avoid a tax deficiency as well as ensure that you are not over- or underpaying.
    11. Make Financial Literacy A Family Priority: While gradually improving in many ways, financial literacy levels in this country are still rather anemic. In fact, the U.S. ranked 14th globally for financial literacy in a 2015 survey by Standard & Poor’s, behind the likes of Canada, the United Kingdom and Germany – just to name a few. What’s more, roughly 41% of Americans grade their financial know-how at a C-level or below, according to the National Foundation for Credit Counseling.This is important not only as it relates to our own finances, but also in terms of how our children will manage money once they mature. Children tend to learn by example, which means yours are likely continuously internalizing how you handle money – information that will serve as the foundation for their future relationships with finance. You therefore need to do your best to improve your own financial performance in order to impart beneficial lessons upon your children.You should also take steps to give your kids hands-on monetary experience while they’re young. This should begin with games – like Financial Football or Savings Spree – that are designed to teach kids about the value of money and encourage positive habits like saving regularly. Then, as your children age, you can provide them an allowance on a series of financial vehicles – starting with a prepaid card, progressing to cash and a checking account, and ending with a student credit card – while requiring them to pay some of their own discretionary expenses.
      This will confer a range of practical benefits, from building account management skills to encouraging budgeting – especially if you actively participate and make the process fun. You can even add our WalletLiteracy Quiz to the mix to see where you stand and track your progress over time.“Having an open dialogue about money early and often can lay the groundwork for financial planning,” said Nicholas Prewett, director of financial aid at the University of Missouri. “Individuals who know the value of a dollar and what it takes to earn those dollars are more likely to respect the idea of financial planning. Parents sharing experiences (good or bad) on taking out loans, paying those off and the sacrifices made to get what they want is also important.”

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