Wednesday, August 22, 2012

Automatic Plan-Make things Automatic-Debt, Savings, and Investments

  1. Figure out Where all of your Money is Going
  2. Make things Automatic-Debt, Savings, and Investments
  3. Make paying off Credit Cards a Priority
  4. Add additional payments to the Debt you like the least
  5. Pay off home early
  6. Make sure you and your loved ones are taken care of
  7. Build wealth and give!

    Make things Automatic-Debt, Savings, and Investments

    There is a reason companies want you set up on an automatic plan, whether it be student loans, car payments, or a gym membership.  If you set it up to come out automatically versus writing a check and doing it yourself, there is much higher probability that the company gets paid.

    So let's all be really smart and copy exactly what companies have been doing for years to get our money. 

    • Most important thing, Pay Yourself-Even if it's $25 every pay period set it up to come right out of your check into your savings.   
    • Because you know where all your money is now going from Step 1, you should have a good idea of your expenses.  The easiest thing to do is have everything set up at one central location.  You can set up your Bill Pay and all of your Savings Transfers.  After you have that set up there may be one or two bills that is easier to go through that company.  An example is my student loans, if I set up an automatic debit through my student loans I get a discount in my rate and still automatic, good for everyone.
    • So if you haven't already start or set up your 401k with your work.  I have read many different ways to look at this, but I recommend starting with whatever your company matches.  If they match 3%, set up 3%, it really is a foolish thing not to use this.  Let's say you make 100K to make things easy.  You set aside 3% of your pay before taxes and have 3K in your 401k at the end of the year, well at the end of the year they match this total, so you now have 6K.  That's a good amount of money for just agreeing to save!
    So you know where your money is going and now you have everything set up to where you want your money to go and even better yet it's automatic.  I think this is a great start, just make sure to monitor the comings and goings.  I like to make sure right before I get paid to make sure everything looks right and is going

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