bluecollardollar: on new year's resolutions for 2012

on the radio with Paul Petillo

books by Paul Petillo

I just published my fifth book - this time with Smashwords! ReBuilding Wealth in a Paycheck-to-Paycheck World by Paul Petillo, copyright 2011 This ebook is available across all platforms including iPad and iPhone, Amazon and Sony.

on personal finance

In the world of personal finance, asking what's the worst that could happen is not the same as asking: "will I be able to afford this?" or "have I saved enough for retirement?"
More personal finance

on retirement

If things are good, for some they won't be good enough. If it turns out that things are not so good, someone will ultimately benefit for this off-chance negativity.
More on retirement planning

on mortgages

American dream or not, the games you may have once played with financing your home are not available for the vast majority of homeowners.
More on mortgages and homes

on insurance

Is the insurance industry the next victim of the financial crisis?
Health Channel

on investing

The mutual fund investor has a great many more options available to them in the post-Great Recession marketplace. The question is: are they right for you as you make a retirement plan using 401(k)s or IRAs?
More on investing

WWW BlueCollarDollar.com

on twitter @PaulPetillo

on personal finance 2012

Cavett Robert once suggested: "Character is the ability to carry out a good resolution long after the excitement of the moment has passed." And that moment for most of us, the excitement just past will begin showing up as the bills for Christmas. Many of us will make a promise to do better with little or no plan as to how we can improve the state of our personal finances.

Review why you made them
Timothy Pychyl, a professor of psychology at Carleton University in Canada, says that resolutions are a form of "cultural procrastination," an effort to reinvent oneself. Among the most common resolutions - and only 50% of us engage in this exercise are the obvious: weight loss, exercise more, stop smoking. And quite a few of us make some promise to ourselves that involves better money management. Unfortunately, these promises create what is known as a false hope syndrome: a belief that you are a better person than the one looking back in the mirror.

A successful resolution requires a rewiring of the brain, which is no easy task. So no matter what the resolution, the only way to make it succeed is to focus on only one promise to do better. The goal should also be specific and done in small steps.

Don't let the bills from Christmas derail the promise
Even before the Christmas holiday had passed, the news was reporting that we had spent more than in previous years and did so without a significant increase in pay. We either tapped into our savings or we tapped the plastic. Which means that the promise we make to improve our personal financial situation will face its first test once those bills arrive from Christmas.

The best way to keep your resolution is to take small steps. Make the hurdle too high, psychologists say, and you will not make the leap, become discouraged and do what you have done for years: break it.

Every resolution you make ironically deals with money. Weight loss usually means fewer restaurants which means money saved. Stopping smoking will put more money in your pocket as well. Exercising for many people might end up saving them money on their health insurance.

But the easiest and most direct way of increasing your personal financial wealth is to increase your contributions to your retirement plan 401(k). Once again this can be done in baby steps. Because the most successful resolutions are done with small changes, celebrated as milestones, increasing this contribution can be as easy as setting a goal of increasing the contribution by 4% over the course of the year by doing so in one percent increases every four months. This of course assumes you are making a contribution now.

If you aren't, then begin with 5%. This level of contribution, in almost every situation will not impact your take-home pay. So nothing really changes. But increasing it by 1% every four months will begin to take a little bit away from your spending. By the time next year rolls around, you will have adjusted to 9% - if you have kept your promise.

Enlist your family
The best resolutions involve some sort of help. Psychologists call these people accountability buddies. And there is no better system in place than your family. Go on a diet and your family usually goes on one too. Go on a financial diet and tell your kids that not only will there be less to spend, but that you are saving it for the future.

Because the goals are not too difficult, you can take the opportunity to teach your kids about why you are doing what you are doing and if you don't really know, the education will be a shared experience.

2012 can be a game changer for you financially and if you do this, it will pay huge benefits later in life. Everyone has a little wiggle room in their budgets and few of us are willing to remove them. Increasing your contribution is the easiest, the least intrusive and actually gives you a better result.

bluecollardollar: from the blog

bluecollardollar: resources