Happy New Year!

Each January I’m filled with enthusiastic hope and a renewed desire to break old habits and replace them with energizing ones that will improve my daily life.  They say the definition of insanity is doing the same things and expecting different results!   To change our finances, we have to make some changes in our behavior.  This crazy economy has forced most of us to analyze how we’re doing with our money and to rethink our purchases and investments.  Money isn’t the most important thing in the world, but it sure touches everything that is.

Did you know that more millionaires were made during the Great Depression than during any other time in history?  It’s true.  If you follow money trends, then you already know that we’re poised for another huge money transition in this country.  The only difference is that the cycle is not just occurring in the United States, but this time it will affect the entire world.

Experts are making all kinds of predictions about what will happen during the prophetic 2012 year.  The fact is, no one really knows for sure, but if you can spot financial indicators and know how the global economy works, then you’re already preparing NOW.  Some financial doomsayers predict a total collapse of the world economy this year, while others are forecasting an uptick from the recession.  Are you prepared for both scenarios?

If the Euro were to collapse, bringing down the Dollar with it, then storing extra food and supplies would seem more prudent than stashing paper money in your bank account or under your mattress.  If currencies around the world dissolve, then investing in gold and silver coins (especially “junk silver” coins) would be crucial.  Getting out of debt should be at the top of your list. Are you doing any of those things?  If not, what are you waiting for?

I am confident the world will NOT end in 2012, but I can’t promise you it’ll be problem-free. Here are some New Year’s resolutions that will protect your money in both good economic times and bad:

1.    Get out of debt.  I put this at number one because if you’re in debt, then it’s very difficult to make wise financial decisions based out of a position of strength. I highly recommend Dave Ramsey’s Financial Peace University material.  His books and radio show are excellent, teaching “baby steps” to help you climb out of your hole and think about money differently.  www.daveramsey.com

Suze Orman says the new American Dream is not being able to buy more STUFF, but instead, it’s being able to have more peace of mind and freedom.  Debt is a noose around your neck that can strangle your life.  That cute new Prada handbag will NOT give you the same feeling as financial freedom.  You have fewer options when your revenue shrinks.  For a free “get out of debt” calculator go to: http://www.moneychimp.com/features/debt_payment_calculator.htm

For more free help, check out www.getoutofdebt.org

2.    Think of every penny as an investment. Before buying something, ask yourself “How could this money be better spent to become an asset for me?”  Most people don’t have money because they don’t know how to spend it correctly. The old adage “Cash is King” becomes more accurate when stated as “Cash FLOW is King.”  Buy things that make you money.  Assets are what you OWN and liabilities are what you OWE.  Take a good look at where you really stand financially.  Those innocent-looking designer coffees or spontaneous lunches with co-workers really add up.  Think twice before handing over your hard-earned dough.

3.    Reduce your expenses by calling all of the companies you do business with each month (cable TV, insurance companies, mortgage company or landlord, cell phone and landlines, etc.) and ask them what they can do for you to lower the interest payments or carve off fees.  Every six months I routinely call and I always get freebies and special concessions.  Just be bold and ask!  You may decide, like me, that you don’t even need a land-line phone anymore at home if everyone in the family already has a cell phone.  This last year I dropped my $65/month satellite dish service and now pay only $8/month by using Hulu and Netflix for all the entertainment I could ever want!  My kids’ Xbox Live works like a free receiver in my family room and my ROKU delivers free programming everywhere else in the house.  Tell your landlord to shave off some moola if you’ll do the landscaping or pool service.  In this economy, everyone is willing to negotiate.  Be brave and just ask!

4.    Increase your income by creating a home business.  There are so many legal deductions available that it’s one of the smartest ways to protect your money.  Whether you sell your old junk on Ebay, write ebooks to sell on Amazon, teach piano lessons or become a distributor for a network marketing company, you’ll be able to claim deductions on expenses such as housing, gas, computers, education and even some entertainment.  Be sure to talk to your accountant before claiming any deductions on your taxes. Reducing your debt isn’t the same as creating wealth.  You need to generate residual income that can be put into assets.  Your goal should be to create enough passive income that it exceeds your monthly living expenses. A JOB will never make you rich.  If you want to sell a company’s merchandise through their multi-level marketing program, make sure the company is in good standing with the Direct Selling Association which has a strict code of ethics the business must adhere to.  You can see their membership listing at www.dsa.org

5.    Get organized.  Millions of dollars are wasted every year by consumers who procrastinate and end up paying late fees. Set up your bills on “auto-pay” so that you’ll never get hit with unnecessary late fees again.  Set up an organized coupon system.  Coupons are like free money.  Clip and save. A free online tool I like that integrates well with Google calendar is www.rememberthemilk.com You can use your mobile phone to scan QR codes from retailers to get virtual coupons too.  Scan and save. Keep an organized maintenance record for each car you own.  Spot sneaky fees by your bank by balancing your checkbook every month. Some budgeting tools I like are:

•    www.mvelopes.com

•    www.buxfer.com

•    www.mint.com

6.    Plant a garden. Eat out less often. Brown bag it for lunch. Cooking your own food can save you thousands of dollars each year. Find free grocery shopping lists based by store or state at: http://inexpensively.com/grocery/

Some web sites I like that give you tons of budget recipes for inexpensive meals are:

•    http://www.tasteofhome.com/Top-10-Recipes/Top-10-Cheap-Dinner-Recipes

•    http://www.hearthealthyonline.com/healthy-recipes/main-dish-recipes/cheap-dinner-ideas_ss1.html

•    www.cheapfamilymeals.info

•    http://www.bloglander.com/cheapeats/category/recipes/three_dollars/

•    www.poorgirleatswell.com

7.    Take your last puff.  End all of those “sin” taxes by quitting smoking, eating garbage, and drinking your worries away.  You could save hundreds of dollars a year, lower your health insurance and reduce office visit co-pays.  It’s true what they say about good health being priceless. In fact, I even found a legitamate company that will PAY you to lose weight!  Check out www.healthywage.com  

8.    Build an emergency fund.  Warren Buffet said “You don’t know who’s naked until the tide goes out.”  Start with six months and add to it as much as you can.  Keep some of your emergency fund as cash and coins in a firebox at home.

9.    Create a written financial plan that includes estate documents such as a testamentary will, financial durable power of attorney, medical durable power of attorney, and living will.  Check out www.doyourownwill.com  or www.free-legal-document.com                       

Plan for retirement savings.  Find a CPA who thinks strategically, rather than just tactically.  Make sure your cash is covered by FDIC insurance and never put more than $250,000 in one bank account.  Diversify and moderation are two words that will guide you well in financial matters, as well as in life.

10.    Give some of your money away.  You heard me.  Whether you pay tithing or donate to good causes, your money will bless you when you use it to bless others.  Teach your children how to control money before it controls them. True wealth isn’t what you HAVE, but what you’re able to GIVE.

Now, I know I SHOULD write 12 goals since it’s 2012, but I’m going to leave the last two slots for you to write your own personal financial goals for the new year.  Design the life you want to live and create financial goals that will enable you to live it!

CENTSerely,

Trina Boice (the fruGAL)