A Relevant 12-Step Program!

One of my favorite personal finance blogs is Get Rich Slowly, and recently the author posted an article called “12 Steps to Financial Freedom in 2012” — and most of his advice is solid, although I’m not entirely sure if his steps should be followed in order.

Here are the 12 steps he recommends:

  1. Set Financial Goals. Get out of credit card debt. Pay off car. Pay off student loans. Accumulate a six-month emergency fund. Save for retirement.
  2. Track every penny you spend. I use mint for this, but I think I need to try the notebook approach. I’m conscious of the money I spend, and typically do not use cash since I know myself well enough to be less diligent about tracking when I have cash. He says to keep track, not to judge. Okay, I’ll do better at this, starting today.
  3. Develop a budget. Done, on the first! I used my lowest-case from 2011 to budget, so that anything above and beyond those numbers gets thrown to the snowball.
  4. Review your bills and ask for discounts. This should be done annually. I have canceled my internet, and will likely not renew it (my phone is 4G and I can use 4G on the computer!), I canceled my membership in one of my wine clubs. I’ll keep the other one as long as it brings me happiness, and so far, it does. My credit card is 0% for the rest of this year (though I’m canceling it the second the debt is paid off), I’ll check electric and car insurance and other bills once I move, and I guess I could ask for an interest rate deduction on my car loan?
  5. Optimize your accounts. High yield savings, interest checking. Done. The author recommends finding a good rewards credit card but in my mind, that refocuses me and has the potential to derail my efforts, so I’m holding off on that until I can put the Discover card to bed.
  6. Start an emergency fund. Done. Right now it only has about $1300 in it but the goal is six months to a year of income.
  7. Get out of debt. I am working on it and should be there before summer!dump the debt
  8. Fund your retirement. I am nowhere near where I need to be on this goal. I am hoping that once my debts are paid off, then I can ask, “what do I do when my IRA is maxed out for the year?”
  9. Automate your finances. I have this one down, almost to a tee. I got hit the other day when a check cleared for about six dollars more than was in my checking account, so thank goodness for overdraft protection. And, since I’m a member of Rivermark Credit Union, the fee was only $5.
  10. Earn extra money. This month, I am going to sell off some things in my house (two dressers to be specific) and work more on my side job to help decrease my debt.
  11. Learn the art of conscious spending. Spend on the things that matter. For me that means buying local produce and meat. Splurging at the local mom & pop grocery store. Skipping Safeway. Using high-end kitchen toys.
  12. Educate yourself.On this point, the author recommends subscribing to his blog. Can you blame him? His site is really wonderful, and gives glimpses into the everyday lives of his staff writers and guest contributors. 
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