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Wallet or Waistline?

Nancy Patterson December 29, 2010 Easy Street 1 Comment on Wallet or Waistline?

Survey Reveals Most Popular Trainer in 2011: Finances over Fitness

Health and Wealth. Those are the two most popular New Year’s resolutions. In a survey by Allianz Life Insurance Company respondents were asked which 2011 resolution they are most likely to keep. Managing their money better (39 percent) was nearly equal to improving their exercise/diet (40 percent).

The survey further revealed that when respondents were asked which type of professional service provider they would most like to use in 2011, 44 percent chose a financial professional, besting the next most popular answer – personal trainer at 26 percent – by 18 percentage points!


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When I read this statistic I nearly shouted WAHOO!, but I was on a jam packed flight coming back from New York  and I didn’t think my fellow passengers would get my excitement over one statistic. Could it be that Americans are finally realizing the importance of financial fitness?

Don’t get me wrong here, it’s important to stay healthy. If you’re obese, are 55 or older, and have a history of heart conditions in your family you’re not likely to be around long enough to enjoy many of your retirement years. But keeping your finances fit is more important to me than hiring a personal trainer to shrink your waistline. Hell if you save and invest like Kevin Raymond, Marc Charles and I tell you to each week you’ll be rich enough to keep a personal trainer on staff in retirement! If you skimp on exercising you gain 15 lbs. If you skimp on finances you go broke and have to move in with your kids. Which would you prefer?

If your 2011 New Year’s resolution is to get financially fit please consider making these 5 financial moves. You’ll thank me in 2012 if you do!

Peace of Mind In An Unpredictable World

Consumer confidence took a dive this month after two straight months of rising optimism. We are just not confident that the economy will improve any time soon. With unemployment hovering near peak levels and home prices continuing to fall in the nation’s largest cities, I am not surprised. We all wish we had a crystal ball to see when this recession will be over. But we don’t, so we must plan for the worst.

Long time readers know that I do not believe in having just three months’ worth of expenses saved in an emergency fund is sufficient. I believe Americans should have 10-12 months’ worth of expenses set aside.

First figure out what amount of money you could live off of each month if you lost your job tomorrow. It isn’t your bi-weekly paycheck times two. No. Add up your mortgage payment, an average cost of your utility bills, car payment, phone bill, etc. These are all your monthly expenses that you will need to cover.

Starting with your next paycheck pull out as much as you can to add to your emergency fund. Treat your emergency fund as a bill you must pay first. Look at it like you are paying yourself first.

Keep these funds in an account you cannot easily access. I like how my friend Shannon does it. She keeps her fund at a bank other than where she keeps her checking account and does not have electronic access to that account. If she wants to withdraw money from that account she must physically go to that bank. She would have to go out of her way to gain access to that money.

Ideally you want to put these funds in a money market or other high interest yielding account. If you ever have the misfortune of losing your job unexpectedly or the boiler suddenly goes out, you’ll be able to weather the expense much easier thanks to your emergency fund. Think of it as giving yourself peace of mind.

Use Credit Cards for the benefits, not the penalties

Reducing your debt, especially credit card debt should be your first step towards becoming financially fit. List all of your outstanding debts and the interest rate you are paying on each one. Your credit card debt will be the one with the highest interest rate. Make this one your top priority. Pay more on this one each month than the others. Once your first debt is paid off, roll that payment into the next debt on your list. Keep doing this until all your debts are paid off.

Next, if you’re not getting a benefit of some kind from your credit card, it’s time to switch. Airline miles, cash back, rewards; there are so many different credit cards out there that offer you some kind of reward. Find the one that fits your lifestyle best. Refer back to my March 17th article for names of specific credit cards that offer great benefits and offer low interest rates.

Seek Advice

I hope you will be one of the 44% of Americans who choose to seek out financial planners in 2011. If you don’t know how much you need to retire how can you adequately save for it? Before you know you’re just guessing how much you’ll need. Heaven forbid you’ve low balled yourself.

I’ll admit you’re already slightly better than the rest of Americans because you follow the weekly advice from Kevin, Marc and I. Nothing can compare to sitting down one-on-one with a financial expert who can map out your retirement and the road you need to take to get there. Do it today. Trust me if you come home tomorrow and tell your wife you set up a meeting with a financial planner she won’t be mad at you. She’ll be proud of your foresight and thoughtfulness.

Increase Your Retirement Contributions

If your credit card balances are at zero, and your emergency fund is topped off then look to this third area to improve upon, retirement. Give yourself the gift of a better future and increase the contributions you make to your 401(k), IRA or other retirement account. Increase your monthly contributions to the maximum amount you are allowed depending on your type of account. For 2010 and 2011 the maximum you can contribute to your 401(k) is $16,500. If you are 55 or older you can add an additional $5,500 to that amount. If you have an IRA the maximum you can contribute is $5,000 for those 49 years old and younger and $6,000 for those aged 50 and older.

If you’ve changed jobs and have not rolled over your 401(k) from your old employer, make that your first action. Roll it over to an account like an IRA which you can control. Maximizing your contributions and rolling over old accounts are super easy to do. You can probably do the whole thing through email or with just a phone call or two. It doesn’t take much time at all. There’s no excuse!

Give The Jones’ Family the Finger

You’ve heard of the Jones Family before right? They are the proverbial family we all try to keep up with. In real life they are usually our friends, in-laws, or neighbors down the street. They are the family who you know make the same or even less money than you do yet they always seem to have a new car, or are able to send little Johnny to Ireland to study abroad or just redid their kitchen. You can’t figure out how they can afford to do all that when you can’t. But you know if they can afford it, you can too.

WRONG. WRONG. WRONG. Next time you wonder how So-and-So can afford something, tell yourself they probably can’t. They have mortgaged their lives to the hilt and will be living with their kids when they retire. Just give the Jones Family the middle finger while you keep your spending in check and keep contributing to your retirement accounts.


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Happy New Year.

Keeping Money In Your Pocket,

Nancy Patterson

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1 Comment

  1. Cannon August 21, 2011 at 4:35 am

    Gosh, I wish I would have had that information earlier!

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