February is already upon us and it’s no surprise that most people start to lose track of the goals they set over the New Year period.
Those goals usually centre on health and money and typically most people are keen to change or improve both of these. While your health should be your number one priority, money is an area of life that can be a blessing or a curse depending on how you handle it.
If your goal is to have a healthy financial 2016 here are 3 key areas to keep in mind.
Rainy day money
Ideally you should have at least 3 months of ‘living’ money stored away in the highest interest earning account you can find. Once you’ve reached your savings goal see if you can continue to add to it until you have 1 to 2 years of ‘living’ money put aside. This might seem impossible at first but if you start slowly and continue you will be surprised at how the money adds up.
Your ‘rainy day’ money reserves will come in handy if a major appliance needs replacing, your home requires repairs, an unexpected expense crops up or you are suddenly without an income.
Bad debt usually consists of credit cards and personal loans and is the silent killer of your healthy financial future. You need to get rid of this type of debt now and fast.
Start with the smallest debt and focus 100 percent on that one debt until it’s gone then move on to the next debt. Breaking down your debts one by one will help you remain focused and won’t seem so overwhelming. (Slow and steady wins the race). You’ll be amazed at how much better you feel (and sleep) without credit card and personal loan debt hanging over you.
Your home or investment loans
For most people a home or investment debt will be their largest expense. As your life changes – marriage, children, single income, empty nest – you should reassess your loan/s to make sure they’re working for you, not against you.
A simple review and change in either interest rate or the structure of the loan could save you thousands every year and possibly take years off the life of your mortgage. So don’t be afraid to shop around or contact a mortgage broker to get yourself the best deal.
Article by: Martin Bennett