Don’t Be Financially Complacent

Complacent

Growing up I played sports, specifically soccer. Most experiences in life I refer to what I learned practicing, preparing and ultimately playing the game I love. If it’s one thing that constantly moves me forward it is this saying:

Don’t become complacent.

In soccer this would usually be yelled out by your coach when you were winning the game easily, or playing very relaxed like everything was fine.

Finances, can become like this. We go through life stages and forget what it was like to be a poor college kid, or living on our own for the first time. How did you survive and how did you get to where you are today?

Was it complacency? We are all in different stages of our lives, but we need to remember not to be complacent. Here are 5 ways to avoid that feeling:

1. Check your credit score

Your credit score can be one item that you completely forget about. You may not be buying big ticket items, or you may be, either way you should check your credit score.

Your credit score affects you more than you may think. It can lower your interest rate on your mortgage, get you better rates on insurance or even lower the financing on a car loan.

If you don’t know your score check your report for free using annualcreditreport.com. Don’t pay for your credit score. Most websites will try and sucker you in to their plans.

If your credit score is low start finding ways to improve it. This means paying regularly on debt, or may include opening a credit card to build it up and create credit history.

2. Neglecting to adjust your savings for retirement

Are you putting money into your 401k? Are you sure that you have the right choices the right selections?

Different life stages may require you to change how much you cans set aside for retirement. By reviewing semi-annually you can make sure you are tracking to your ideal retirement age.

Did you lower or raise your contributions? Could you offset your taxes by doing so? Changes in jobs or life stages can lead to us forgetting how much we are setting aside.

Take the time to set aside at least 10% of your income. If you got a late start look to set aside 15-20% of your paycheck.

3. Neglecting to review insurance options

How often are you reviewing your insurance rates? A funny thing happened to me about a two years ago. I randomly decided to see if I could get a better rate than my current auto insurance coverage and low and behold I was. Now, I make it a yearly task to double check my rates. It’s not just auto, it’s homeowners, life, and disability.

The best way to do this is to use an independent agent who can run multiple quotes so you can see what truly is the cheapest. We all have smartphones why not set up a yearly reminder to call around and save yourself money!

Turning a blind eye to insurance can mean not reaching your financial goals. After all, you will never use it right? Wrong! Insurance is a much needed part of your financial plan. Review with your advisor and see where you have gaps or may be overpaying. With so many carriers vying for your business you’re bound to find one you can afford.

4. Neglecting to consolidate and eliminate debt

Stop paying interest on your debt! One of the biggest negatives to your financial plan is your own self-indulgence. Not paying credit cards in full every month, or not budgeting correctly. One of the biggest weak spots that I constantly see in people is overextending themselves. Here is a quick ratio. If you have more than 36% of your income as debt, you are in over your head.

What to do…. start by cutting back. Do you really need cable at $100+? The gym membership, how often do you go? Can you be enjoying more things by eliminating useless items? The credit card and loan companies love your money, so don’t let them win! Create a habit of paying off your debt every month, and learn to live debt free. Have someone keep you accountable, as this will keep you from falling back into old habits. Surround yourself with people who think like you do, so you don’t feel pressure to overspend.

5. Neglecting to drive older cars

One of the worst decisions you can make is to make a car payment you cannot afford. As one who is looking for a new car, I can tell the cost certainly can add up. After doing the one car thing for the last two years, and by the time you add in the gas, the insurance and the car payment, buying a car is not my idea of budget friendly.

That’s why I try to pay cash or a majority of cash for car purchases. Look to offload your car once the miles get too high and the value has hit a peak. Look to use Kelly blue book to evaluate the value. If it looks like a good time to sell, it may work for the best. This way you don’t have to worry about the car depreciating in value any further and you can use a good chunk of that sale as your all cash offer on your next car.

We all know we should be doing these things, the problem is when life is good, we forget. We also can’t keep our head above water when life is bad. Try to develop a reminder system, this way you have no chance to be complacent.

What areas do you feel you are complacent in right now?

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