A Perfect Elixir for Financial Stress — Drink Up Now and Sleep Better Tonight!

A column devoted to answering your questions on consumer, mortgage, small business and non-profit investments and lending programs to help you navigate the new financial landscape. Send your questions to bill.carter@civicfcu.org.


We’ve certainly amassed a wealth of knowledge over the years. Whether it’s the dozens of “I got out of debt” success stories we’ve been a part of to the scores of psychological studies we’ve covered linking better financial decision-making to behavior change.

There is no better time than now to review our top money tips into one juicy, super-helpful read. From the best ways to budget, to how to boost your earning potential like a pro, these nuggets of financial wisdom are as fresh as the day they were published.

First Things First: A Few Financial Basics

1. Create a Financial Calendar

If you don’t trust yourself to remember to pay your quarterly taxes or periodically pull a credit report, think about setting appointment reminders for these important money to-dos in the same way that you would an annual doctor’s visit or car tune-up.

2. Check Your Interest Rates

Q:Which loan should you pay off first?

A:The one with the highest interest rate and/or the largest monthly payment.

Q:Which savings account should you open?

A:The one with the best interest rate.

Q:Why does credit card debt give us such a headache?

A:Blame it on the compound interest rate. Bottom line here: Paying attention to interest rates on all accounts will help inform which debt or savings commitments you should focus on.

3. Track Your Net Worth

Your net worth — the difference between your assets and debt — is the big-picture number that can tell you where you stand financially. Keep an eye on it, and it can help keep you apprised of the progress you’re making toward your financial goals — or warn you if you’re backsliding. I suggest doing this before the start of a new year so that you will be ready for the coming 12 months. However, you should track medical expenses, car repairs and ANYTHING that you don’t track in your monthly budget under miscellaneous.

How to Budget Like a Pro

4. Set a Budget, Period

This is the starting point for every other goal in your life.

Here’s a checklist for building a knockout personal budget.

  • Create an Excel spreadsheet listing all known fixed expenses — mortgage, car loan, insurance payments, fixed loan payments.
  • List all known variable expenses — utilities, food, gas, credit card minimum payments.
  • Create a column for non-monthly recurring expenses such as medical bills or auto repairs. Although not in your monthly budget of expenses, you should record these larger unexpected expenses each month to obtain an estimate of what your annual expenses in these areas will be. Although not coming as a regular monthly expense each month, you will need to track and total each quarter to estimate how much you need to set aside in your monthly budget to save for similar expenses moving forward that you consider miscellaneous.

5. Take a Daily Money Minute

Many of the top financial advisors recommend setting aside one minute each day to check on your financial transactions. This 60-second act helps identify problems immediately, keep track of goal progress and set your spending tone for the rest of the day! It’s just simply a matter of being aware of what’s going on in your accounts.

6. Allocate at Least 20 Percent of Your Income Toward Financial Priorities

By priorities, we mean building up emergency savings, paying off debt and padding your retirement nest egg.

7. Budget About 30 Percent of Your Income for Lifestyle Spending

This includes movies, restaurants, and happy hours — basically, anything that doesn’t cover necessities. By abiding by the 30 percent rule, you can save and splurge at the same time.

How to Get Money Motivated

8. Draft a Financial Vision Board

You need motivation to start adopting better money habits, and if you craft a vision board, it can help remind you to stay on track with your financial goals.

9. Set Specific Financial Goals

Use numbers and dates, not just words, to describe what you want to accomplish with your money. How much debt do you want to pay off — and when? How much do you want saved, and by what date?

10. Adopt a Spending Mantra

Pick out a positive phrase that acts like a mini rule of thumb for how you spend. For example, ask yourself, “Is this [fill in purchase here] better than Bali next year?” or “I only charge items that are $30 or more.”

11. Love Yourself

Sure, it may sound corny, but it works. Being the master of your own finances is a totally “freeing” experience. I don’t know about you, but it’s been the single greatest source of stress in my life. Love yourself, get rid of the stress.

12. Make Bite-Size Money Goals

One study showed that the farther away a goal seems, and the less sure we are about when it will happen, the more likely we are to give up. So in addition to focusing on big goals — say, buying a home — aim to also set smaller, short-term goals along the way that will reap quicker results — like saving some money each week in order to take a trip in six months.

13. Banish Toxic Money Thoughts

Hello, self-fulfilling prophecy! If you psych yourself out before you even get started (“I’ll never pay off debt!”), then you’re setting yourself up to fail. So, don’t be a fatalist, and switch to more positive mantras.

14. Get Your Finances and Body in Shape

One study showed that more exercise leads to higher pay because you tend to be more productive after you’ve worked up a sweat. So, taking up running may help amp up your financial game. Plus, all the habits and discipline associated with, say, running marathons or working out are also associated with the discipline needed with managing your money well.

15. Learn How to Savor

Savoring means appreciating what you have now, instead of trying to get happy by acquiring more things. Be grateful. Many are homeless and hungry.

How to Amp Up Your Earning Potential

16. When Negotiating a Salary, Get the Company to Name Figures First

If you give away your current pay from the get-go, you have no way to know if you’re lowballing or highballing. Getting a potential employer to name the figure first means you can then push them higher.

17. You Can Negotiate More Than Just Your Salary

Your work hours, official title, maternity and paternity leave, vacation time and which projects you’ll work on could all be things that a future employer may be willing to negotiate.

18. Don’t Assume You Don’t Qualify for Unemployment

At the height of the recent recession, only half of people eligible for unemployment applied for it. Learn the rules of unemployment. Do your research. It may bring you a few more dollars.

19. Make Salary Discussions at Your Current Job About Your Company’s Needs

Your employer doesn’t care whether you want more money for a bigger house — it’s about about keeping a good employee. So, when negotiating pay or asking for a raise, emphasize the incredible value you bring to the company.

How to Keep Debt at Bay

20. Start with Small Debts to Help You Conquer the Big Ones

If you have a mountain of debt, studies show paying off the little debts can give you the confidence to tackle the larger ones. You know, like paying off a modest balance on a department store card before getting to the card with the bigger balance. Of course, we generally recommend chipping away at the card with the highest interest rate, but sometimes psyching yourself up is worth it.

21. Don’t Ever Cosign a Loan

If the borrower — your friend, family member, significant other, whoever —misses a payment, your credit score will take a plunge, the lender can come after you for the money, and it will likely destroy your relationship. Plus, if the bank is requiring a cosigner, the bank doesn’t trust the person to make the payments. Bonus tip for parents: If you’re asked to cosign a private loan for your college student, first check to see if your kid has maxed out federal loan, grant and scholarship options.

22. Every Student Should Fill Out the FAFSA

Even if you don’t think that you’ll get aid, it doesn’t hurt to fill out the form. That’s because 1.3 million students last year missed out on a Pell Grant — which doesn’t need to be paid back because they didn’t fill out the form!

23. Always Choose Federal Student Loans Over Private Loans

Federal loans have flexible terms of payment if your employment dreams don’t exactly go according to plan after college. Plus, federal loans typically have better interest rates. So be smart about the loans you take out.

24. Choose Mortgage Payments Below 28 Percent of Your Monthly Income

That’s a general rule of thumb when you’re trying to figure out how much house you can afford. And this is 28 percent of your gross income not your take-home pay. Just remember that few people can change their lifestyle to afford a higher mortgage payment.

How to Shop Smart

25. Evaluate Purchases by Cost Per Use

It may seem more financially responsible to buy a trendy $5 shirt than a basic $30 shirt — but only if you ignore the quality factor! When deciding if the latest tech toy, kitchen gadget, or apparel item is worth it, factor in how many times you’ll use it or wear it. For that matter, you can even consider cost per hour for experiences!

26. Spend on Experiences, Not Things

Putting your money toward purchases like a concert or a picnic in the park —instead of spending it on pricey material objects — gives you more happiness for your buck. And remember that material items are basically housing your cash, and in a financial crunch cannot typically be quickly sold to recoup the cash.

27. Shop Solo

Ever have a friend declare, “That’s so cute on you! You have to get it!” for everything you try on? Or have a buddy egg you on to go ahead and purchase that shotgun that you know you can’t afford? Save your socializing for a walk in the park, or a sporting event, instead of a stroll through the mall. You should begin to treat shopping with serious attention.

28. Spend on the Real You—Not the Imaginary You

It’s easy to fall into the trap of buying for the person you want to be: chef, professional stylist, triathlete, Rock Star.

How to Save Right for Retirement

29. Start Saving ASAP

Not next week. Not when you get a raise. Not next year. Today. Because money you put in your retirement fund now will have more time to grow through the power of compound growth.

30. Do Everything Possible Not to Cash Out Your Retirement Account Early

Dipping into your retirement funds early will hurt you many times over. For starters, you’re negating all the hard work you’ve done so far saving — and you’re preventing that money from being invested. Second, you’ll be penalized for an early withdrawal, and those penalties are usually hefty. Finally, you’ll get hit with a tax bill for the money you withdraw. All these factors make cashing out early a very last resort.

31. Give Money to Get Money

The famous 401(k) match is when your employer contributes money to your retirement account. But you’ll only get that contribution if you contribute first. That’s why it’s called a match, see?

32. When You Get a Raise, Raise Your Retirement Savings, Too

You know how you’ve always told yourself you would save more when you have more? We’re calling you out on that. Every time you get a bump in pay, the first thing you should do is up your automatic transfer to savings and increase your retirement contributions. It’s just one step in our checklist for starting to save for retirement.

I know these things seem simple but doing them continuously everyday will keep you from getting behind the financial eight-ball. Set up a spread sheet, change some behaviors and this will become second nature to you. I guarantee you will sleep better at night!

Bill Carter is Director of Fire/EMS Business Development for Civic Federal Credit Union in Raleigh. He has been in the financial services industry for 41 years and serves on the Advisory Board of the North Carolina Fallen Firefighters Foundation. You can send your questions to him at: >a href=”mailto:bill.carter@civicfcu.or”/a<.

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