Simplify your finances, simplify your life…

Simplify your finances, simplify your life…
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As I mentioned in my last post, I’m really trying to get my finances in order in 2014. After sitting down and building a realistic budget with my husband, I have to admit I was exhausted. After a few days of these three hour sessions, both of us were ready to surrender and go back to what we’ve been doing the past few years. Like many of you, I have been asking myself if it’s really worth all this time and energy. We’re not in the worst financial position w could be in but I know we could also be in a much better position too. Hmmm…so much is going through my mind right now and I didn’t know what to do.

With New Year’s Eve coming up in a few days, both of us want to get things started now if we really are going to start making major changes. So, in order to get a bit of perspective, I decided to take a walk to think about things. Sometimes I find it helps to take a break when it comes to thinking about finances. This way I can focus on why I want to make changes, helping me validate my original thoughts.

So when I went on my walk around the neighbourhood, what struck my mind? Why did I need to get our finances in better shape? The first thing that came into my mind was a picture of my kids. I see so much potential in both of them and want to give them everything they could possibly need or want. In the world we live in, this requires some financial planning – university, traveling, whatever it is costs money. The next thing that came into my mind was my loving husband. For so long, he’s had aspirations to start his own business and we’ve never been in a position for him to do it. I’d love to make a plan to get us to this stage. If we pay off our debts and develop a long-term plan, I’m sure we could turn his dream into a reality. The last thing that comes to my mind is my own parents. They live in another part of the country and I’d love for them to move closer and I’d want to take care of them when they are older. Although they have money saved and own their own home, you never know what expenses may be around the corner.

So, is all the hard work and planning going to be worth it? The easy answer after a bit of perspective is yes obviously.

After my walk, I decided to do some research on how to simplify my finances so we can kick things off in 2014 easily. Part of the issue I was having before is that we were over-complicating the issue I think. It is something we need to be serious about but sometimes baby steps even make a difference.

Here’s what I found…

First of all, I find that I’m not alone. There are countless websites and blogs about managing personal financial affairs and many people feel that there is a lot to track, making things more complex that most first think.

I also find out that one in three adults say that their finances have taken a turn for the worse in the past few years and that these same people say their finances have grown more complex. Likewise, 43% of those who say their finances have improved also say their finances have grown less complex. That’s somewhat reassuring.

The other thing I find is that a number of people who started build simplicity into their financial plans became more confident and that it made tough decisions easier. Sure, some things can’t be made simple like income tax filing and saving for retirement. However, other things don’t have to be so difficult. I found eight simple things that felt right to me to start getting my finances in order, lower my debt and get my family on the right track.

Here are the 8 tips I’m going to use to get myself on track – they’re manageable, easy-to-implement and ones I can get started on today.

1) Keep two credit cards – right now I have too many credit and store cards – I know that. I’ve decided that downsizing to two is realistic and it will still give me the flexibility I need. Also, I will probably save a lot on annual fees and make things a lot easier to manage just from having to manage a lower amount of bill payments. I can also take this a step further and use one card for monthly spending and the other only when I have to carry a balance. I’ll take a look at all of my cards and keep the ones with the lowest interest rates or annual fees, or those that offer useful rewards.

2) Start paying my bills online – although I do this with most of my bills, I need to make sure that I do it across the board. This way I won’t waste money on stamps, envelopes and physical cheques. It will take me a lot less time too and will help me automatically keep track of what I’m spending and where I’m spending it so I can easily review it.

3) Choose one financial institution only – this is where we’re guilty as right now we are with three. Large financial firms offer the same basic range of services and accounts. I can probably get everything I need in one place and I may be able to negotiate some special rates for my accounts.

4) Automate everything – I was pretty hesitant on doing this but apparently arranging bill payments by direct deposit can save me money since it will eliminate trips to the bank. I can arrange for regular payroll or bank account debits that go right into our retirement account or into a regular savings account.

5) Ask my bank for overdraft protection – linking our chequing account to your savings account to avoid the cost and hassle of overdrawing my account.

6) Create an emergency fund – this is something we really need to do. People say that you should reserve six months of living expenses to guard against unexpected expenses that derail your plans. This amount scares me if I’m honest – my husband and I have decided to start with a modest $300 and then build it up every month as much as we can. If no emergencies happen, we can have that as savings to use for something important.

7) Save, save, save – we are going to start saving at least 10% of what we make every month.

8) Use technology to manage our finances – I’m going to look into signing up for an account service like Mint.com that can allow me to view all my accounts in one place.

Once I found out these 8 tips, I actually felt a lot more relaxed about getting our finances in order in 2014. All of these 8 steps are very easy for us to start right away. Now we can simplify our finances but more importantly we can start to simplify our lives!!

Here’s to a debt free 2014….

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