You can approach the new year in two ways: You can have the depressed feeling that nothing will change, or the uplifting feeling that nothing will change. It mostly depends on how many properties you own. If the answer is “none”, or “I failed to rob sufficient banks to buy a one room apartment in this country”, then your mood is probably down. Here are seven resolutions you can make, so you can join the money wagon this year:
1. Pledge to Make at Least $250 From Your Credit Cards
Some people just pledge to pay off credit card bills. That’s for low-expectation weaklings.
That’s like saying: “I pledge not to be jailed for culpable homicide this year“. Unless you work in retail, how hard can that possibly be? No, you need to aim a lot higher.
This year, pledge to make money out of your credit cards. Aim to make at least $250 from your card by the year’s end. This can be in the form of discounts, rewards, cashback, etc. Remember, so long as you pay bills in full, the effect of any card can only be:
- Cost reduction (Discount)
- No effect (Zero interest)
Assuming you use the right card for the right purpose (e.g. petrol cards for petrol, grocery cards for groceries) you should reach $250 long before the year’s out. Check that your card(s) is optimum, via comparison sites like SmartCredit.sg.
On that note…
2. Cancel or Redeem Points From All Your Cards
Look in your wallet, and I’m sure you have junk credit cards. Like that 50% super-discount card, that’s only valid at one store at the Mt Everest base camp on rainy Thursdays.
Call the bank and cancel them. It’ll take you 15 minutes, and save you accidental fee payments. Besides, fewer cards mean easier book-keeping.
Before canning them though, be sure to redeem all the reward points. Most people let these accumulate like a hobo’s ear wax. Then they forget to redeem a free flight ticket to Bangkok or something, and the points are wasted.
3. Build Your Emergency Fund
You should have an emergency fund, of around three to six months of your income.
This can easily be accomplished by shaving your head, donning sack cloth, and living interest-free in your hermit cave till 2014. Alternatively, you can save around 20% of your income each month.
Yes, the latter method requires more than two years.
Which is all the more reason to start now. An emergency fund provides financial and psychological security: You’ll be less reliant on credit, and more capable of switching jobs if you have to. Also, should you need to sell illiquid assets like property, an emergency fund extends your holding power.
4. Review Your Insurance Plans
If your insurance has a savings (growth) component, talk to your agent about it. Compare the growth of your insurance plan to alternative investments.
With REITs and Index funds showing high yields (5% or more), is your insurance keeping up? Otherwise, it might be time to cash in and re-invest. And while you’re at it, get some quotes from other insurers. Available plans change all the time; you might find an insurer who’s willing to charge you lower premiums.
Yes, I know watching garden slugs mature is more entertaining. But it’s just once a year.
And hey, at least car insurance comparison is fast. Just visit sites like SmartInsurance.sg to find the cheapest.
5. Sell Your First Item Online
We don’t have room for garage sales in Singapore (And those of us who have garages are the last people who’d need garage sales).
Flea markets aren’t the best alternative either; you have to lug the stuff to market, and wait hours for people to buy 0.01% of it. So how do you clear out your junk and make money? You go online.
Pinterest, E-Bay, use whatever you like: Just learn to use one of these sites. Make it your goal, this year, to sell that hideous punch bowl your aunt gave you five Christmases ago. Yes you can, the Internet is full of people with bad taste and spare cash.
Once you get the hang of online selling, your house will be surprisingly empty. And your wallet surprisingly thick.
6. Review Your Automated Payments
Check out your cable TV subscriptions, club memberships, or anything that’s automatically taken out of your bank account.
Get a chair, prop your feet up, and think: How often do I use this? What is the worst that can happen if I lose the subscription or membership?
I’m not saying “cancel everything you love”. Just the stuff you use infrequently. Take magazines, for example: If you read a magazine in-depth, every month, then it’s worth subscribing. But if you’re leafing through it as an afterthought, maybe you can just get one off the news-stand every two to three months.
While you’re at it, don’t forget mobile phone plans and Internet service providers. December and January are usually “promotion-heavy” months; so compare prices and rewards. If you’d get a free PS3 for renewing your contract, and you were going to anyway, you’ll kick yourself for missing it.
Finally, make a commitment this year: Promise to review automated payments every three months, to get the most out of them.
7. Learn About Home Loans
Home loans are a bit tricky in 2013. Follow us on Facebook, and we’ll explain it in upcoming articles.
This year, make a pledge to study and understand home loans. Grasp the nuances of floating and fixed rates, SIBOR and SOR rates, and the unique features of each package. Don’t take this as a passing remark: 2013 will be a more difficult year, especially for property investors.
There are new restrictions on home loans, and refinancing has gotten more complex. In a nutshell: You need to treat every home loan package as though it may be the last package you’ll get. Don’t count on dancing between loans every three years, as was possible before.
Visit sites like SmartLoans.sg, and talk to their mortgage specialists if you have to.
Get more Personal Finance tips and tricks on www.MoneySmart.sg
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