2014 is going to be my year. After spending a lot of 2013 digging myself out of old financial mistakes, I'm ready to start the new year with a new savings plan. My goal next year is to pay off all of my debt and establish an emergency fund of at least $5,000. Ideally, I should have enough in my emergency fund to cover three to six months of living expenses, but it's going to be hard to do that and pay down debt at the same time. So I'm going to focus on saving and getting out of debt first.
How do I plan to save money in 2014?
Here are my six strategies:
1. Use it up, wear it out, make it do, or do without.
I don't know who first came up with this saying, but it was a popular slogan during World War II. Like many classics, it's worth keeping. In my case, it means wearing socks with holes in them, as long as the holes are in places people can't see. It means cutting shampoo bottles open to get everything inside. It means eating all the food in the refrigerator instead of ordering takeout. If I've got it at home, I have to use it up before I can buy new.
2. Wait 30 days.
Of course, before I buy a new one, I'm going to wait 30 days to see if I really need it. I read about this one from J.D. Roth at Get Rich Slowly. For purchases like new clothes, new books, or that trip to the hip new restaurant -- wait 30 days. Chances are, your desire will pass and you'll realize that you don't need to buy whatever it was you thought you wanted.
3. Embrace the library.
I always loved libraries as a kid. It's time to start loving them as an adult. At least I won't have to wait 30 days before I check out a book I want to read! Libraries now also have DVDs and CDs along with stacks of the world's great literature. So, instead of going out to the movies, I'll be able to take a free movie home with me.
4. Fix my credit.
In addition to paying off my credit cards in 2014, I am going to go over my credit scores and fix my credit. Right now, my credit score is lower than I'd like it to be, even though I make all my payments on time. This, however, may not be my fault; the staff at Lexington Law reports that many low credit scores are caused by "clerical errors, mistaken identities, improper accounting, or simple misunderstandings." Taking the time to fix my credit now will save me hundreds of dollars later, when I'm ready to take out a car or home loan.
5. Pay myself first.
This is another financial-blogger strategy, this time from the good people at Wise Bread. As soon as you get your paycheck, auto-deposit it into various accounts: your emergency fund account, an account set aside for rent and bills, and an account for paying off credit cards. (Many banks will let you set up separate savings or checking accounts for these purposes.) That way, you always know you have enough money to pay your bills, and you're also aware of how much "fun money" you have left.
6. Tell everyone about my goals.
This is the last one, and it's what I'm doing here; right now. Think of it this way: if a person says "I'm dieting," you understand why they're passing up the birthday cake. If I say "I'm saving money," you understand why I'm not going to every happy hour. That way, we're all in this together.