How to be Smart with your Money Daniel Gamez January 4, 2014 Business, Lifestyle Financially Fit in the New Year by Daniel Gamez Between the holiday parties with open bars, and football season filled with hot wings, beer and pizza – we could all probably stand to shed a few pounds. But it’s not just our bodies we need to get back into shape…it’s also our wallets! After all the holiday spending, let’s look at what it means to be financially fit and how to get there. Being financially fit means you have financial security. How do you reach financial security? You remain knowledgeable of how you’re spending your money, budget your spending, eliminate debt, and increase your assets on a monthly basis. Just as we don’t expect that holiday gut to quickly melt away overnight, we can’t expect to be financially secure overnight. Here are some important tips to get you financially fit in the New Year. 1. Watch how you’re spending your money. How am I spending my money? It’s seems like such a simple question and most of us think we know, but you might be surprised if you track your true spending. The advent of the smartphone app has made this once tedious task so simple—Toshl Finance, Expensify, moBudget, and EasyMoney, to name a few, can help you easily see how and where you’re spending your hard earned cash. You need to fully understand where your money is being spent every month. And with very little effort, you can get an accurate picture of where you can cut back on expenses. It’s impossible to budget for your future if you don’t know where your dollars are going every day. Keep track of your cash flow so you can review it at the end of the month and determine if your spending is truly necessary. 2. Finance your future – cut back on the credit cards. It’s easy to throw down the credit card and worry about paying it off later. Before you know it, you could find yourself in massive credit card debt. Here’s a good rule of thumb: If you won’t have it by the end of the month don’t buy it on credit. This includes meals, bar tabs and any other form of entertainment you might indulge in. You may look cool to your buddies at the bar, but it’s not cool to finance a pitcher of beer at a 19% APR! 3. Work on getting out of existing debt. If you already have a large amount of debt, how do you get out of it? Burying your head in the San Diego sand is not the answer! If you have significant unsecured debts such as credit card debt, medical bills, payday loans, personal loans or private student loans, you should take action sooner than later. You have options to get out of debt. Two of the better-known ways are debt consolidation and bankruptcy. Consolidating your debt essentially means taking out one large loan to pay off many smaller loans. You are still paying off the same amount of debt, but at a lower interest rate. In a bankruptcy, you either liquidate your debt (Chapter 7) or reorganize your debts and assets (Chapter 13). A lesser-known but viable option is debt settlement, which is a negotiated reduction in what you pay back to your creditors. The savings is oftentimes significant compared to continuing to pay the minimum monthly due each month. This is a good choice if you have more debt than you can pay off in a two or three year period or if you have experienced a significant financial hardship that has caused you to fall behind on your monthly payments. It’s advisable to speak with an attorney with experience handling consumer debt if you are considering any of these options. Most offer a free consultation to review your situation and help you determine which route makes the most sense for you. 4. Increase your assets every month. This seems like a no brainer. You’re receiving a paycheck, so you must be getting more financially “secure,” right? Wrong! If a significant portion of your paycheck is going towards your debts, then you are not increasing your assets. Once you get control over your debt and budget, you are in a better position to increase your overall financial portfolio. And only then will you be on your way to being financially fit in the New Year.