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How to use your hard earned money quickly to Reach Your Goals

So you save a few dollars, payment of debts, or invest for the future. What do you do with money, so you can achieve your goals in the fastest and easiest way possible – and not waste time or money to bad decisions?

Step One: Your Emergency Fund

You've received an inheritance of $ 50,000. What are you doing with the money? Yes, you could buy that big screen TV and sound system, and make great holiday – but what if you wanted to make huge progress on your goals and not let the waste of money aside, bit by bit?

You have $ 500 left after your monthly bills and other fixed expenses are paid, and you set aside money for gas, food, clothing and other necessary expenses. You could spend that money on small luxuries, pay extra on your mortgage or save for retirement. How can you make the decision?

The first priority should be setting aside money in your emergency fund. Yes, even before you pay your debts credit card (unless you are in default or behind on your bills – then first pay them enough to update them).

Few matter how much debt credit card you have, the first step in creating a prosperous future is to change your habits. When the unexpected The bill comes (and it always does), you must have money in your emergency fund to pay the bill to avoid a trip more debt credit card. If you've spent every extra dollar to try to repay your debt and have no money set aside, when something unexpected happens, you will accumulate debt even more and come back where you started.

Your emergency fund should contain three to six months of your actual living expenses online. Or more … I have customers up to a year of assessment, reserved, typically They are generally risk adverse, are self-employed or have a stream of fluctuating income. Your amount is three to six months of your salary – it is the bills and not necessarily expenses you would if you were unable to earn an income. These funds should be maintained in a cash account, typically a savings or money market account. The Weinstein family Emergency Fund is an ING Direct Orange Account savings.

A line of credit home equity (HELOC) does not count. Yes, you could use a line of their property, or subscribe a loan on your house if you have been unable to earn income or had emergency expenses. But, he would simply build up your monthly expenses and debt even further. And since interest rates rose, the same tax deduction does not offset the high cost of using the HELOC.

Once you have a well-established habit of saving money every month and you have your emergency fund set aside we can move on to the next step – prioritizing debt and your life goals.

Action Step:

Open a box dedicated savings or money market Emergency Fund account. Set aside a fixed amount of money each month – if she is 50 , $ 500 or $ 5,000 – until your fund is three to six months of living expenses.

Step Two: Pay Off "Bad" Debt

You set up your emergency fund, and has created a wonderful habit of saving $ 50, $ 500 or $ 5000 per month. We want to let that habit disappear … then where will we put your money now?

Step 2 is to pay any "bad" debt. What that means really depends on the person, and your tolerance for debt. Some people are not particularly bothered by debt, so that their only "bad" debt are those where high interest rates or minimal tax advantages (non-mortgage claims of non-student loan).

There are two situations where I may ignore the interest rate, and recommend the client to repay debt ASAP.

(1) loans from family or friends. These loans, while low interest, may be eating away the relationship, without you even know. They may reduce the relationship to a formal, tense, money-based transaction, instead of love, friendship, support obligations. You may know debt is a problem, or ask other parents to see if the debt is a problem in the culture of the family – if so, pay off rapidly.

(2) The debt is now your place at night or make you feel successful. The debt may be the new "American way" – but it is not fair for all or even most people. The monthly payments, or even the idea that you could be taken or seized, may be you eat up at night. You may feel venerable, or like you've never met any of your goals until that debt is extinguished.

If this is you, then your debts may become a high priority even over other goals, like college funding or purchasing a new home. Whether your debt will be paid as a high priority, not only depends on the interest rate but the rate of mental and emotional you are overwhelmed with interest each month, you make loan payments.

Action Step:

Take a personal inventory your debts and how much they are costing you the mental and emotional energy. Do they bother you? How? If yes, how low the rate interest is paying them off should be a high priority. Start today – pay an extra $ 10, $ 100 or $ 1,000 on the principal each month. Better yet, sign up for automatic bill payments on your bill online bank account of merit pay for make regular automatic payments every month or quarter.

Third step: funding targets – Base Level

Now you have configured your emergency fund, and pay your "Bad" debt, including a loan from a family member, a credit card high, and an old debt of a college that was really bothering you.

You have a lot of goals – retirement, repayment of your mortgage, buying your next house, launching a new business, and send children to college.

Who comes first? Retirement? Children? The repayment of your debts? How do you decide?

Step 3 of the location of your Next $ 1 is to fund your goals in order of priority, to basic levels – the amount of money needed to meet the minimum requirement of your aim.

For example, how much money do you need to pay your bills in retirement – not live an extravagant lifestyle, or play golf every day for 20 years, or travel the world – but how to prevent the entry of a cardboard box and live comfortably?

How much money do you need to save to send children to State College, as opposed to Ivy League? How much would it cost for the house you need, as opposed to the home you want?

Then fund the minimum, the baseline of these objectives in order of priority. This may mean you start contributing to your retirement plan or IRA, then contribute to a 529 plan for college kid, then put aside money in a CD to start a business in 3 years and then, finally, invest to raise funds for a bigger house.

How can you decide the order of priority? First, determine if there is another way to pay for the order, plus your own savings – If yes, then it is probably a lower priority than the purpose for which you have no other alternative. For example, there are loans readily available for college, but not for retirement (with the exception of a reverse mortgage). Also, you may get investors or a loan to fund a new business, and pay with the new revenue streams.

Second, evaluate if you drop "of free money "by not using pretax or matching savings or retirement plans. If you can record pre-tax, the federal government contributes to your goal (since you do not pay these taxes), and if you do not take advantage of this year each, you are leaving money sitting on the table. Similarly, if you're lucky to be employed by a company which corresponds to a regime 401 (k) plan, you may want to contribute at least the match to "rent" your body to help the employer to your pension.

Action Third step:

Prepare a list of your goals in order of priority. Look at your # 1 Goal – it is really your most important or is just the first order of time? Any special types of accounts or debt available for this purpose? What is the cost of your goal? What is the basic level to achieve this goal?

Set aside money each month to fund the core level of your No. 1 objective – use your automatic savings or investment plan to help you run this week action phase.

Step Four: Above and Beyond …

You have reached limit your emergency fund has paid for your "bad" debts, funded and minimum levels of your goals in life more important. Great job! What's next?

Step 4 is to fully fund your goals in order of priority. For example …

* Max your Roth IRA if you are eligible.
* Max your 401 (k) and IRAS (yes, you can do both, the IRA is perhaps not deductible).
* Purchase of shares ESPP (and do not regularly sell and diversify).
* Contribute to a 529 plan and / or taxable investment account for educational college.
* Invest in taxable or tax advantage accounts for various future goals, or additional retirement funds.
* Buy Real Estate Investment and / or rental property.
* Pay off your mortgage.
* Buy CDs or bonds to individuals, dated in time objectives.
* Leave money sitting in your Health Savings Account, invested and a tax-deferred until you roll over an IRA for your retirement.

Wow, you have more money sitting on the table? Wonderful! If your goals are already funded, so do not forget to enjoy your money now. Take a vacation first class rental service running for a few hours a week, buy a new sound system, or make a significant donation to your favorite charity. Savings, the balance of your future goals to live life now.

Action Step:

Choose your goal highest priority in step 3. Have you fully funded this purpose, for achieve your ultimate dream? Assess whether you have funded the minimum level of your other goals. If you then choose an action step in the list above … and enjoy your prosperity!

About the Author

“Money Maven” Elizabeth Potts Weinstein, CFP(r), JD, helps women achieve their most important goals through financial planning, money coaching, classes, books, and her membership community. To get her free Special Report, How to Avoid the Top 10 Money Mistakes, go to http://www.TheWealthSpa.com.

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