finances

HIGHLIGHTS: How to Avoid Living by Default and Design Your Ideal Life Part Two

Photo courtesy of Shutterstock

Photo courtesy of Shutterstock

 

Last week we explored the process of conducting a life audit and its resultant benefits. This week we explore the areas of work, finances and time and productivity.

 

1) Work

 

When I did my first life audit at twenty nine, I was an out of work housewife who was entering into a divorce. Nearing thirty I was increasingly career driven and even although I knew I needed a job, in truth I wanted to build a career. Like anyone conducting a life audit, I had to realise the incongruity between where I was and where I wanted to be. I therefore scored my work life at a zero out of ten.

 

I set about brainstorming possible career paths and came up with several options. I would later choose the most engaging option from my list, and begin moulding my career aspirations into a tangible, step by step goal.

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HIGHLIGHTS: How to Avoid Living by Default and Design Your Ideal Life Part One

Photo courtesy of Shutterstock

Photo courtesy of Shutterstock

 

For many years I lived by default. I tended to neither plan ahead nor set goals. I was directed by the winds of change and whichever direction the wind blew was where I ended up, completely by chance. When I was twenty nine that all changed. Anxious about turning thirty, I decided to face my fear of failure and be brutally honest about how far away I was from realising my dreams.

 

Although it was a difficult process, this wasn’t by any means a morbid endeavour – quite the contrary – it was inspired by my desire to fulfil my dreams. I knew that in order to achieve what I wanted I first needed to be honest about where I was, so I could navigate myself to where I wanted to be. I then brainstormed what I might want to accomplish, acquiring as many different ideas as possible.

 

I soon called how I took stock of my achievements and imagined my possible future accomplishments, a life audit. This process has served me so well that I now conduct one at the beginning of every New Year, to help me evaluate where I am, and consciously think about what I might want to unfold in the year ahead.

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The dangers of re-mortgaging

When you have substantial equity, such as a house, that you could base your borrowing on, it is seriously tempting to re-mortgage. But ask yourself this. If you didn’t have the money for a bigger mortgage before, how come you do now? And do you honestly, really have the money now?

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Why having credit cards that you don’t use harms your credit score

Did you know that by owning a credit card and not using it, your credit score gets worse? When you think about it, it makes sense, after all, if the credit is not being used there is no opportunity to see if you repay it promptly, thereby handling debt responsibly and gaining a higher score.

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Why spending could be damaging your dreams; How to create a budget that supports your life goals Part Four

Photo courtesy of Shutterstock

Photo courtesy of Shutterstock

 

Last week we examined how to cut back on spending and create a life goals budget, this week we look at how to create a monthly savings budget, how to budget with cash envelopes and explore how to evaluate your earnings strategically.

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 190 times – 17 KB

 

Monthly savings budget – five year plan

 

Now plan how you are going to allocate your savings to your goals each month, using the life goals budget as guidance to when you will start saving and for how long. Also bare in mind when the goal is due to be completed and take into account the more minor things you will need to save for like birthdays, anniversaries or Christmas. This is the stage where you will clearly see how you are able to realize your goals financially and it is an incredibly powerful exercise, one which will empower you to create the life you long for!

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How to boost your credit score (and why you’ll be glad you did)

I recently checked my credit score and, after it being bad as recent as one year ago, it is now classed as excellent. The entire reason for the transformation was that I took out a credit card. I know, I know, it can be a risky thing to do, but I limited the risk by getting a very low credit limit. Most importantly (and I can’t stress this enough) I only used it to buy things I already had the money for. I simply paid by credit card and then immediately paid off the balance – not leaving myself in debt for more than a few days at a time. If you know you have the discipline to do this (and only if you’re confident you do) this is an extremely effective way to make your credit rating healthy again.

 

In the UK registering to vote raises your credit score, as does being at the same address for a long period, having the same bank account for a long period and obviously paying all debt on time and in full (and that goes for mobile phone bills too). Remember, in the UK, if you live in shared accommodation your credit score is also effected by the credit rating of those you live with – so choose your housemates carefully!

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How to check your credit score (and why it’s important)

I recently got my credit score from Doddle, a UK based site which offers the service for free. The reason I did so was because in the next few years I aim to buy a house with my boyfriend and I wanted to be as proactive as I could in making sure I had the best possible chance of securing the mortgage I needed. I was pleasantly surprised to discover that although there is always room for improvement, it is very healthy.

 

I would encourage absolutely everyone to get their credit rating, which you can now actually do for free. Of course, if your credit score is bad, such credit score sites offer an inexpensive service that tells you how to get your rating healthy again. Although this does cost a small amount of money the service is invaluable and well worth doing if you have a bad rating or are looking to buy a house or take out credit in the near future.

 

To get your free credit report please click on the links below. Remember ignorance is only bliss so long as you don’t realize the hard way you were ignorant (like getting rejected for a car loan or mortgage for example).

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Why paying off debt before saving is essential

The problem with debt is that often the interest on it is high – really high! In order to become financially healthy we must first pay off all loans and credit card debt. The only exception to this is with mortgages and car leases, which are ongoing costs (unless you are in arrears, in which case pay these off first too).

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Budgeting in action: open three instant savings accounts and name them after your goals

Now that you have a brand spanking new budget what better than to organize your savings by opening three new instant savings accounts to celebrate? This will allow you to keep track of how much you have saved up for each goal and means that you won’t ever get the purpose of which monies are for which goals confused and thereby leaving you short changed for completing a goal.

 

I personally have five savings accounts and they are named:

 

  1. Car Savings (for my insurance, MOT, services and maintenance)
  2. Peter Trip (money to see my boyfriend as we live long distance)
  3. America
  4. South Africa
  5. Website (stay tuned – they’ll be a big redesign next year!)

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Budgeting in action: Finish your life goals budget

Please download Accessible Psychology’s ‘Financial Budgeting Spreadsheet’ below, to take part in today’s exercise:

 

Download “Finance-Budgeting-Spreadsheet.xlsb” Finance-Budgeting-Spreadsheet.xlsb – Downloaded 190 times – 17 KB

 

Life Goals Budget, Part Two
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