While this isn’t fitness or parenting related, I wanted to talk about another hobby of mine: personal finance. With the new year upon us, I wanted to reflect on positive money-related actions I took last year that have helped me better define my 2019 outlook.
Everyone’s personal finance journey is unique, whether you have credit card debt and/or student loans, whether you’re looking to build your emergency fund or save for a house, or maybe you’re looking to save for retirement. There’s no one-size-fits-all solution. That’s why it’s personal finance.
Below are seven actions I took last year to progress my journey to financial freedom.
1. I Cancelled My Gym Membership
After discovering Beachbody On Demand (at-home workouts), I was able to cancel my family gym membership, saving me a whomping $160/month. The 1-year contract I stupidly committed to cost me nearly $2000. With Beachbody On Demand I’m only paying $100/year.
2. I Purchased Life Insurance
Once I freed my budget of an unused gym membership, I told myself I’d use that money to buy my husband and I life insurance. Since having kids, plus building a house, God forbid something happened, I wanted to protect my family from financial burden. Having life insurance now gives me peace of mind for less than a family gym membership.
3. I Consolidated My Credit Card Debt
While I’ve never had student loans, I’ve unfortunately carried a good chunk of credit card debt for my entire adult life. For a while I was attempting to pay off my debt using the avalanche effect. Essentially you focus on paying off your credit card with the highest interest rate first, and then move onto the next until you of course are debt free. Compared to the snowball effect, this method will save you the most in interest as you pay off your debt.
Unfortunately as I would pay down cards though, I would still continue to use my credit.
Last summer I decided to consolidate all my credit card debt into a 5-year, fixed-rate personal loan instead. This lowered my monthly payment and put me on a path to eventually becoming debt free in just 5 years. Summer 2023 can’t come soon enough!
4. I Started Using My Credit Cards for Rewards
Consolidating my credit cards zeroed out my balance across the board. At first I locked the cards away, but recently my husband and I have been using our cards with rewards to pay for everyday purchases. We then pay off the balance each month so as not to accrue interest, and then redeem the rewards we’ve earned for gift cards.
5. I Switched My Auto Insurance
Speaking of credit card rewards, we recently switched auto insurance providers, and charged the 6-month premium to a $0 balance credit card that earns rewards.
Instead of being debited month-to-month for a higher premium, I now make a much lower payment to our credit card. I simply took the balance, factored in the interest, and divided it by six. Yes, I’m getting charged interest on the revolving balance, but I saved myself $80/month plus got 5x the coverage.
Eventually one of my goals it to work towards paying the 6-month premium in cash.
6. I Started Saving for Retirement
My employer doesn’t offer 401(k)’s, so last year I made it a goal to open up a IRA. I chose Wealthfront to open an IRA as I find them to be perfect for beginners. When you sign up through an affiliate link, your first $5,000 is managed for free. This also gives the affiliate an additional $5,000 managed free. If you’re interested in opening a Wealthfront account, consider using my affiliate link to benefit us both.
On the other hand my husband’s employer does offer 401(k)’s. His employer matches 100% of the first 3%, and then matches 50% of an additional 2%. This is free money, so this is a must-do no-brainer. In 2017 we were only contributing 3%, but last year I bumped it up to 5% to get that extra match.
7. I Opened an Ally Savings Account
Ally is an online bank that offers ~2% interest on savings accounts. What I like about Ally is you can open up multiple accounts and give them labels. I opened up two and labeled them Emergency Fund and Girls’ Piggy Bank. Other ideas might be vacation fund, Christmas fund, etc.
I also adjusted my husband’s direct deposit to deposit a percentage into the emergency fund first, and then deposit the remainder of his check into our main bank account. If there’s one thing I learned last year about working towards financial freedom, it’s to automate. This automated savings, and my husband’s automated 401(k) contributions are effortless ways to put our money to work for us.
Looking Ahead in 2019
Unfortunately when I seem to find savings, I also seem to find unforeseen expenses. We recently received letters that both our escrow and budget-wise utility bill were underpaid last year (from when we transitioned from building to living in our house), which basically means for all of 2019 we have drastically increased payments. I now call 2019 the year of no savings.
But I like to think positive and know everything will work out. I just have to keep my budget and financial goals in mind. So my financial goal for 2019 is honestly to just get through the year the best I can and anxiously await for my escrow and utility bill to decrease.