Written By: Leah Chester-Davis & Bill Miller
A quote by country music star Brad Paisley seems to make its rounds on social media at the beginning of each year: “Tomorrow is the first blank page of a 365 page book. Write a good one.”
While we’re still early in the New Year, it’s worth looking at how we can make it the best year possible. Bill Miller, loan officer with Carolina Farm Credit in the Browns Summit and Graham offices, shares these five tips to stay on track financially.
- Know what your current financial picture looks like. The beginning of a new year is a good time to take stock, assess your situation and make necessary adjustments. “Start with cash and liquidity,” says Miller. “With the market bouncing up and down nowadays, you can sometimes find some really good deals and save yourself some money with cash.” If you have cash on hand, now may be a good time to explore certain purchases that can help you achieve overall goals. Your debt situation is another part of the assessment. Minimize revolving debt such as credit cards. Keep an eye on home equity lines of credit. Over the past year the prime rate has gone up several times. This can affect both credit card and home equity lines of credit, resulting in higher rates for you.
- Set aside cash for an emergency fund. If you have bumps in the road, cash can help you fix them. Calculate your monthly living expenses and develop a plan to save money to cover at least three months, preferably six, of expenses. Miller advises keeping your emergency fund separate from other accounts. Consider it a safeguard to touch only in an emergency.
- Set your goals. Where do you want to go? What is your end game? Do you need to set aside money for a college fund, retirement, the purchase of farm equipment? Jot down your goals for the year and then look back through the list to assess what are absolutes and develop a plan to achieve them.
- Turn to experts. Any smart plan will include tools such as life insurance, a will, and for those who are self-employed a retirement vehicle such as a SEP IRA. One piece of your plan may be to find a good financial advisor to guide you through the different options. Touch base with your loan officer as a starting point.
- Work your plan. The best way to achieve your goals is to stick with your plan. The best way to stick with a plan is to assess your situation periodically. Miller says it pays to take some time each month to assess how you are doing and whether you need to make any corrections. “I lean toward the Dave Ramsay thought of making up envelopes every month of your known expenses. If you make $2,000 a month, allocate where it is going and then keep up with it.” If envelopes don’t work for you, use a notebook or a spreadsheet. The key is to track your expenditures and to not spend more than your income.
“Slow and steady wins the race,” says Miller. “You can overload the wagon really fast. Make your plan, seek expert advice when needed, and make adjustments throughout the year.”