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How to turn over a new leaf in your financial life

Allie Johnson

March 30, 2016

It’s spring and green is everywhere, including in your wallet — if you ditch some old financial habits and replace them with new ones.

Spring is a good time to take a look at old money ruts you may have fallen into, says Cary Carbonaro, certified financial planner and author of “The Money Queen’s Guide: For Women Who Want to Build Wealth and Banish Fear.”

“It’s a good time to start fresh,” she says.

So as we all do some spring cleaning, here are six common money behaviors that might be weighing down your financial life, and how you can turn over a new leaf:

1. Start with a budget.

The Old You: You never get around to creating a budget because it seems like a big, complicated chore. Besides, you’re pretty sure you need some kind of expensive budgeting software to do it right.

The New You: You make a simple budget by sitting down and adding up all of your income and the total of your fixed monthly bills. “You can even write it down on a napkin,” Carbonaro says, adding that she prefers to use an easy, free budgeting tool such as Mint.com. After you subtract your fixed bills from your income, you divvy up the remaining money among the variable expenses such as groceries and clothing and give yourself a set amount for “fun money.” Before agreeing to a night out with your pals, check your budget to make sure you have enough “fun money” left.

2. Pay your bills on time.

The Old You: When your paycheck hits your bank account, you celebrate by going out to dinner because you’ve been broke since you spent your previous paycheck. After you’ve treated yourself, you eventually get around to paying your bills. Sometimes you wait too long and get a late payment that drags down your credit score.

“Most people just need to make little tweaks to really improve their financial situation.”
— Lacey Langford,
financial counselor

The New You: You commit to paying your bills on time by putting them first. And you admit that if you rely on yourself to remember to pay your bills, you may occasionally forget or procrastinate, especially if you’re traveling, Carbonaro says. The solution? Set up online banking to pay your bills automatically right after your paycheck gets deposited. “It makes life so much easier and prevents late payments,” she says.

3. Plan for unexpected expenses.

The Old You: You’re surprised when your car breaks down, even though it’s been making a weird noise for months. You put the repair on a credit card and pay $100 extra in interest over the year it takes to pay off the balance. Just when you get your balance to zero, you break your wrist and leave the ER with a large bill that you don’t have cash on hand to pay.

The New You: You admit that car problems and ER visits will happen, so you plan ahead. “Everybody has emergencies,” Carbonaro says. So what do you do? You start building an emergency fund with as little as $25 a week, she says. “You’ve got to start somewhere.” And make sure you automatically transfer that money into an out-of-the-way account so you won’t be tempted to tap it, says accredited financial counselor Lacey Langford. Use either a bank across town or an online bank that pays slightly better interest rates than a brick-and-mortar one, she says.

4. Save for your retirement.

The Old You: You toss your company’s retirement information into a desk drawer and plan to worry about that stuff later. You put a little in your 401(k), but you’d rather go on a beach vacation now than worry about your future.

The New You: You treat retirement savings like a bill. If you have an aggressive contribution taken right off the top of your paycheck, you get used to living without that money and you set yourself up for a much better future, Carbonaro says. It’s best to max out your retirement contribution to your 401(k) at work, if you have one, especially if your employer matches your funds, she says. “That’s a fabulous place to start.”

5. Mind your money and credit cards.

The Old You: You pull out your credit card for coffee, lunches out and bottled water. By mindlessly putting small daily expenses on your card, you fritter away your money, says Neale Godfrey, author of “Money Doesn’t Grow on Trees.” “All of a sudden, by the end of the week, you’ve spent $100 on nothing.” Then you can’t buy the things you really want or need. For example, Godfrey worked with one woman who racked up $19,000 in credit card debt charging stuff such as fancy juices and pizza and then couldn’t fulfill her dream of buying a motorcycle.

“All of a sudden, by the end of the week, you’ve spent $100 on nothing.”
— Neale Godfrey, author of
“Money Doesn’t Grow
on Trees”

The New You: You look over credit card or bank statements to see what you’re buying that doesn’t bring you much joy. Often these are convenience items that can be easily eliminated from your budget by planning to bring coffee and a sandwich to work most days, Godfrey says. When you do make small purchases, use a debit card or cash so you feel the pain of spending. To prevent yourself from reaching for your credit card, cut out a picture of something you really want but can’t buy immediately, such as a beach vacation or a new dress. Tape that image to your piece of plastic, she says. Then put money you save toward that item.

6. Pay down your card debt.

The Old You: You pay only the minimum, or just a little more than the minimum, on your credit card debt. You never make much headway paying down your balance because the interest charges eat up most of your monthly payment. You complain to your friends about being in debt.

The New You: You sit down and make a plan to get rid of your credit card debt in a doable time frame. You find extra money in your budget and focus on paying off the highest interest debt first, Langford says. “It’s as simple as writing it down on a piece of paper or a spreadsheet,” she says. If you want to accelerate your debt repayment, consider a side gig to bring in some extra money. It could be something as informal as mowing a few lawns a month for $50 each, she adds. If you’re overwhelmed by debt, consider making an appointment with a credit counselor from a reputable nonprofit credit counseling agency. Credit counseling agencies offer debt management plans, in which the agency may be able to negotiate lower interest rates and one lower monthly payment on credit card debt.

If you want to move from the old you to the new, pick one step, do it, and you’ll be on your way. “Most people just need to make little tweaks to really improve their financial situation,” Langford says.

SEE ALSO: 5 easy ways to track your card spending

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