Tuesday, December 22, 2015

5 Financial New Year's Resolutions for 2016

Can you believe it?  2015 is practically over!  I can't believe how fast this year went by.  Can you?  December is the month to look back and look forward.  Put your introspective hat on and come up with as many financial mistakes that you can remember.  The more the better.  From this list of blunders, create financial resolutions for the new year.

I know it's hard.  We are naturally wired to forget the things that cause us pain, especially money decisions that left us broke or struggling even more.  But remember we must!  Or we are doomed to repeat the past.  These are some of the financial mistakes I made last year:

1.  Not building a sufficient cushion with my rental income.  I kept taking the money out and using it elsewhere.  Some of the money was put to use buying stock, reducing my liquidity.  I loaned $1,200 to family and have only seen $500 of it back.  Of course during the year there was a major issue with one of my properties and I didn't have the money in my rental business account to cover.

So my first financial New Year's Resolution for 2016 is: Let the income coming from rents of my three rentals mount until I have three months of mortgage payments for each property saved up.

This is akin to having an emergency fund.  My emergency fund allowed me to be able to stroke the mortgages on my properties for a month without the need to use credit cards.  Do you have an emergency fund to cover unforeseen expenses?

2.  Not using my credit cards enough.  My credit scores are near 800.  But they could be way past 800 if I actually used my credit cards.  Inactivity is a thing, people.  It costs you credit score points to have a credit card and simply not use it.  I was reticent to use my two cards out of sheer laziness of having to deal with a bill or an online session.  There are so many cash back rewards perks I could've taken advantage of.  My Chase card, e.g., gives me the opportunity to earn cash back on certain purchases throughout the year.  I threw these mailings and notifications away every time.  And it's not like I was going to forget to pay the balance at the end of the month, and have an interest payment.  I'm super on top of things.  With credit and lending standards tightening much more, as a result of the Federal Reserve hiking the Fed Funds Rate, now is the time to bulk up your credit score.  So...

My second financial New Year's Resolution is:  Use my credit cards.  If you're afraid to use your credit cards frequently, maybe because you had a bad experience, etc., I advise you to visit Credit Card Insider.com.  The content on this site is trustworthy, rich in financial information, and useful to everyone, especially College Students, who could benefit and learn more about student credit cards.

3.  Not giving more.  I gave this year to several school clubs and to homeless people on the streets.  I didn't give much to non-profits with great causes.  Giving more is the single greatest motivator for making more money.  Great things come to people who understand that the purpose of becoming wealthy is to make an impact on the world.  Sure there are tax benefits to giving to charity.  But finding something you are passionate about, like feeding hungry children around the world, tugs at your mind, heart, and soul.

My third financial New Year's Resolution is: To research and find a great charity to give money to.

4.  Not contributing enough to my Roth IRA.  This was one of the worst years I've had to date to add funds to my retirement within my Roth IRA.  The Gomez's had a bunch of expenses that hit us hard this year.  We had a termite infestation, a tree that needed removing, a speeding ticket, a refrigerator that needed repair, and we put the kids in pre-school twice a week.  The result:  I've contributed less than $1000 so far.  I have until April 2016 to get closer to the $5,500 limit.

My fourth financial New Year's Resolution is: To automate my Roth IRA contributions.  You have to pay yourself first!  Don't wait until the end of the month to make a cash contribution to your Roth IRA, like I did.  Don't skip a month either.  Even a small contribution is better than none at all.

5.  Not getting a will.  I'm not ready to transfer my assets to a living trust.  Nor do I have the time to manage one.  The cost of a will is a fraction of that of a living trust.  Not having a will is irresponsible of me. So...

My fifth financial New Year's Resolution is:  To set-up a Last Will and Testament at a discount legal services site like, LegalZoom.com.  If you have children, you need to do something similar, if not the same.

These were the top five financial mistakes I made in 2015.  And as you can see, I've used them to make financial New Year's Resolutions for 2016.  You may have made many financial mistakes of your own.  Trying to attend to all of them in 2016 is foolish.  Work on those first that make the greatest impact to your financial health.

Thanks for reading!  Until next time.       

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