Sometimes we get a chance to take a big step forward, financially.  Sometimes something goes right for us in terms of money.  Examples include: finally getting a job after a long time laid off,  getting a better job with higher pay,  refinancing to a super low rate,  selling a house and moving to a better one.

When (not if) these things happen to you, bravo and congratulations.  You've worked through enough hard times, you deserve some good news.  But, make sure to hold the line!

What I mean by this is, don't spend all your new found money and end up worse off than you were before.  Before the positive step forward came, I bet you had all sorts of great ways to save money, keep expenses low, make ends meet.  And you just knew that if fortune ever came your way again, you'd make sure to never get into money trouble again.  Well, now you have to follow through on that.

You'll have to fight against many urges when you come into some money.  You'll want to just relax a bit, take the pressure off and treat yourself.  That's just fine, but be careful.  Perhaps the biggest risk you'll face is that you'll just start spending your money at a faster rate than ever before.  And you'll blow through whatever windfall you've achieved.  I've seen this happen all too often.

Best thing to do is make a budget, and stick to it.  I don't mean to throw cold water on the celebration party.  But be careful, be deliberate, follow your budget.  Still treat yourself, but just a little, for a little while.  Then get back to business.

Good luck, and peace!

How about this:  make a goal to get completely out of debt in 3 - 5 years?  That'd be great huh?  And DON'T WORRY ABOUT YOUR CREDIT SCORE.  That is too often a bludgeon that the industry uses to keep us borrowing.  There are plenty of ways for credit bureaus to gather info and develop your credit score.  Go here on my site for more info about credit scores.  

If you don't have much debt, keep it that way.  If you have a lot, make a plan to get out of debt.  See  here  about reducing debt.

Good luck!

Many people don't know what financial planning actually is.  Well, it's not a silver bullet, a magic incantation, or a super elixir that cures all money woes.  Financial planning is, quite simply, an ongoing process that you establish in your life to regularly address and manage your money.   It works step by step, over time.

There are many many processes out there, with different steps and different approaches.  But I think they are all basically the same:

1. Organize - Get organized.  Write down your financial information into an easy to understand (for you) format.  How does your income compare with your expenses?  How do your assets (assuming you have any) stack up against your debts (I hope you don't have much!)?  Once you've gotten organized, you can begin to think about what you need to do.
2.  Make a Plan - What should you do about your finances?  You've organized and looked at your situation.  What needs to be done immediately?  Over the next year?  Over the next three years?  Write these to do's down, with dates.  Put the dates on a calendar.
3.  Follow the Plan - You know, of course, that none of this work will amount to a hill o' beans if you don't follow through and actually do the to do's on your list, right?  Do what you need to do in order to help your ability to follow through.  Get a a friend or family member to help you stay on track.  Put big encouraging notes on your calendar.  Set up reminders on your smartphone or online calendar.  Do whatever works for you, so long as you follow through.  This is a process that will help, over time, if you stick with it.
4.  Repeat -  Same time next year, go through the process again.  Before you start rolling your eyes and sighing dramatically, you should know that this gets easier each time you do it.  You get more organized and understand things better.  But, the most important thing is that you do this process year after year.  You can't change everything in one hour or one day.  But you can make some big change in a year.  In three years, you can begin to turn things around.  In five years or more, you can change your life.

Develop a plan that seems like it will work for you.  Stick with it.  Tweak it over time.

Good luck!  You can change your whole life, step by step.

If you are lucky enough to own a home or condo, and haven't refinanced your mortgage yet, don't worry - there are still great rates out there.  But, make sure to keep it simple!  I too often come across people who want to refinance and get tripped up by the sales people involved in the process.  Here are some key points to keep in mind:

• A simple mortgage will be best.  Go with a fixed term (like 30 years), fixed rate (an interest rate that is locked in forever), and pay no points (mortgage brokers confuse people with these).   In other words, a 30 year, fixed rate mortgage with no points.
  
• Don't let the process cause you to borrow more.  People usually set out to refinance their existing balance and then end up borrowing even more, at the lower rate.  This can wipe out any benefit that you're seeking to gain from the refinance!   Hold the line.  Borrow only enough to pay off your existing balance.
• Be ware of online lenders.  If anyone asks you to pay closing costs or other fees up front, then walk away.  You should be able to go through the whole process and pay at the very end, when your refinance is approved and closing.  There may be some nonrefundable fees, but these should be a small part of the whole and should be clearly explained to you.
• Work with a small local credit union or local bank branch, with someone that seems like they are taking the time you need in this process.  They should be patient and should work with you closely.
• Remember that mortgage people (brokers, orginators, etc.) are paid commission on the size of the mortgage they get you to take.  This puts their needs at odds with yours.  You're trying to reduce your costs with the lower rate.  They are trying to get you to borrow as much as possible.  You are the boss.  Do what is best for you, and don't worry about them.

Good luck!

For those of you who like big picture stuff, here's my annual review of the year past, with comments about what we might see in 2013.  It's intended to be easy to read and down to earth.... kind of an investor's focus because some people care about that.  I hope it is helpful for you!  Click here.

For 2013, try being more intentional.  What I mean is this: try to slow things down and act with a sense of control.  You could do this in many areas of your life of course:  you could be more careful with your eating, your exercise, the way you treat others.  But for our purposes here, let's focus on being more intentional financially.  Don't shoot for changing everything all at once.  But take a step, take two steps, toward taking charge of your money.  Here are two ideas:

1.)  Shop with cash.  Whenever you go out to buy something, whether it's groceries, clothes, a cup of coffee, whatever, plan what you're going to buy, and use cash to buy it.  You will spend less than if you use a debit or credit card. There have been studies that show that shoppers who use cash spend much less than those who use plastic.  And, you won't be tricked into those last minute impulse purchases - you know, those things you don't need at all, but buy anyway.  Do this, and I bet you will spend less and feel more in command of your money.

2.)  Pay off the smallest loan first.   I've spoken of this in an earlier post, but it's worth repeating.  If you have a lot of debt, spread over many things: car loan, credit cards, mortgage, and so on, a good way to make progress is to focus on paying off the smallest one first.  Each month, you continue to pay all of your debts - paying the required amount, on time.  Now, focus as much extra cash flow as you can onto the smallest of your debts (by smallest I mean the one with the smallest principal balance).  Keep doing this until you pay that smallest debt off.  This frees up some cash flow.  Now, focus on the next smallest debt and try to pay that one off as quickly as you can.  And so on until you're out of debt.  This process might take time, several years even.  But it works.  By focusing on the smallest debt first, you will see your progress.  And that will encourage you to continue.  And, you will make an impact on your cash flow situation in the near term future.  

Well, I hope these tips help.  Here's to a happy, blessed, and intentional new year!

Peace!