New Year Resolutions: How to Save More in 2012
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Some of the more common new-year resolutions include spending less, and saving more money. Here are some practical tips for growing your savings.
Some of the more common new-year resolutions include spending less, and saving more money. Here are some practical tips for growing your savings.
2011 was the year of debt: From homeowners struggling to pay off their mortgages, to home foreclosures, to indebted governments and continents, to dismal bond auctions – the top news stories of the year revolved around debt.
Related Slideshow: The government debt of 12 eurozone nations
How can one get out of debt, and save more?
1. Understanding your debt and liabilities
First things first, it is important to understand how much debt we are dealing with.
According to RateSupermarket, automated payments coming out your account makes it hard to lose track of the total amount you owe. Start by making a list of all your debts, and their interest rates, and pay off debts with the highest interest first.
Common examples of debt include your credit card bills, student loans, automobile loan, and mortgage.
2. Spend wisely
It starts with being aware of your expenses and where your money goes. It’s not about scoring an item on discount and how much you saved on that item, it’s about spending on what you really need.
3. Consider refinancing
Interest rates are currently at historic low, so it might not hurt to take a look at your current mortgage to see if it would be wise to refinance. Cutting even $100 from your monthly mortgage payment will mean huge savings over the life of your loan. But be sure to understand the terms of refinancing, as sometimes the cost to refinance does not outweigh the savings.
4. Don’t invest on headlines
Investing on headlines is a losing investment strategy, says Andy Brooks, head trader at a mutual fund company T. Rowe Price.
[quote] People watching the news or CNBC who have their finger on the trigger, that’s a dangerous game. It’s anything but investing. It’s more like putting your money on a 32 black at a casino. [/quote]5. Don’t trade on emotion, too.
In 2011, it seemed as if the DJIA would soar a couple hundred points one day, only to wipe out all gains a few days later. Such volatility can make people super-bullish, or just downright scared.
“More often than not, investors make poor investment decisions when they let their emotions get in the way. Resist emotional trading, don’t let short-term volatility shake you out of your long-term investment plan,” says Michael Farr, president of money management firm Farr Miller & Washington.
Follow the news, get expert opinion on the state of the markets, before making any decision on impulse.
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Related: Understanding Personal Finance
