Personal Finance Mistake Corrected
I have finally managed to resolve all three of the major personal finance mistakes I made shortly after school! Correcting these mistakes has definitely been critical in turning around my financial situation.
The biggest mistake took the longest to resolve but that is to be expected. Over the course of 2006 I had already managed to organize my expenses using Quicken and at the end of December I added a roommate(my wife) to help share living expenses.
By selling my truck a few days before Christmas, I managed to rid myself of my second largest expense for 2006!
I had managed to justify the purchase at the time but over the past 2 years owning a new car has been a large drain on my finances. I decided that to see real change from my current situation I needed to change my expenses in a major way. The usual advice of “don’t get a daily latte” and “pack a lunch” would not apply because the proportion of my income eaten up by these expenses was tiny compared to the big three of Rent, Transportation and Food. My housing situation currently is great and I am slowly controlling the costs of food. Therefore transportation offered the best opportunity for savings in the next year.
Because I have not used the truck very much and it was in good condition I manage to sell it for a very reasonable price. With this money I was able to do a couple of things.
- I paid off the balance of my auto loan
- I will be able to pay off 70% of my credit card debt
- I was able to free up 13% of my monthly cash flow for savings and investments just by eliminating the monthly note.
I will put the extra cash into cash savings for now and will pay off my credit card balances as my 0% transfer offers run out. It won’t be much but by leaving this money in savings and not paying off my debt right away I should be able to squeeze a little bit of extra interest on the money. This should help set the stage for great things to come in 2007!
