Saturday, October 04, 2008

Staying Focused, Staying Confident

In the craziness that continues to happen in this economy, it is important to stay focused and remember to review your overall plan. Focusing on this plan is a big part of making sure that you are able to withstand all of the news and panic that is running amok lately.

For me, personally, the plan is pretty straightforward and so I figured I'd share it with you.

1. Pay all bills. Not just on time. Early. Period.

2. Never commit to debt that I am not extremely comfortable with paying off in 3 years or less. The only possible exception to this is a mortgage in the event of a move.

3. Continue paying down outstanding debts, focusing mostly on the smallest debt until it is paid down. Personally, I do not focus every free penny on debt paydowns like some personal finance experts advocate doing. I think that the importance of a significant emergency fund is just ignored during these broad statements about debt reduction.

4. Continue building the emergency and freedom funds with approximately 10% of net pay each month. Emergencies happen, and it will feel great to have money for these items when/if they come up. Although as a general rule, I try to pad the monthly budget so that most minor emergencies can be absorbed without tapping the fund.

5. Increase contributions for retirement accounts in small increments; currently focusing on slowly increasing the roth ira contribution until it is maxed out.

6. Continue to seek out additional sources of income; and cultivate the value I add for my company at work and improving my life. This step is something that I think people can forget. When layoffs happen, they keep the people that are the most valuable to the business. When raises happen, they are given to the people that are appreciated based on what they bring to work each day.

So in the end, there's really no magic. Just keep doing what I'm doing. And I'd encourage everyone to do the same thing. Most of what happens 'out there' is beyond our ability to seriously influence. This bill passing even though a large number of constituents voiced their concerns is a good example. So, do what you can control, by sticking to your plan.

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