New Year, New Financial Resolutions

January 31, 2012

By Heather Compton

New Year…New Resolve

Presents are opened, holiday traditions honoured and the cookies devoured. Once again we find ourselves at the end of another holiday season, and turning our attention to the future and our intentions for a bright and prosperous new year.

Every year millions of us put pen to paper writing New Year resolutions. How can we achieve a better life for ourselves and our loved ones, how we can improve our health, finances or time management skills?

Million Dollar Experiment: An Aldergrove Experiment

One hundred families in Aldergrove, BC have a very big resolve – to increase their collective net worth by a million dollars in 10 weeks time – that’s $1000 per family per week! These families are the subject of a new TV series by Corus Entertainment’s OWN: Oprah Winfrey Network (Canada) that began airing Sunday, January 22.

Show Me Your Bottom Line

People are often more willing to publically disclose the state of their intimate relationships before the state of their finances so it will be interesting to see how co-hosts former financial broadcaster and author Bruce Sellery and clinical psychologist Dr. Joti Samra coax people out of their comfort zone and into revealing their bottom lines.

It’s hard to imagine a focus on debt management, out-of-control spending, credit card bills and the cost of kid’s after school activities as compelling entertainment but this is the world of TV and there are some attractive financial incentives on the line!

Net Worth, Not Self-worth

Regular readers may remember visiting Your Financial Report Card. First add up every last dime of financial assets and then subtract total liabilities (debts) – and there you have it, that’s your net worth. Calculate your own Net Worth Statement with an easy to use excel spreadsheet from our website.

Our mission is to increase or grow our net worth throughout our working life so that we can spend our retirement years drawing it down. With good planning we’ll spend our last dollar as we take our last breath!

Aldergrove residents have an ambitious goal and only 10 episodes to meet the challenge. How will they do it? In many of the financial programs I present to young and old we are looking for the “magic bean”. There is no “magic bean”.

Road to More Revenue

Residents’ first step is to STOP adding to liabilities. That requires handing over the credit cards, cancelling the lines of credit and not taking on new debt in any form. Next they’ll look for alternative sources of revenue. Some will get paper routes or part-time jobs, maybe work paid overtime hours, babysit, or rent out the basement bedroom. H & R block will help residents review past tax returns to see if any deductions or savings were missed. Expect garage sales and on-line listings for unutilized household possessions, perhaps some will decide to sell the second car or “downsize’ their house. Some will check the couch for loose change!

Stop the Spending Spree

Once avenues for further revenue are exhausted the focus must shift to reducing spending – swaps, barters, car pools, meatless Mondays, an increase in library card use, cancelling or downgrading cell phone plans, no more meals out, family game nights at home instead of out to a movie, a new look at the cost of cable TV, brown bag lunches, and home-brewed coffee will all feature on the agenda.

Increase the dollars in, decrease the dollars out, pay down debt, and increase the return on your investments. Those are the only ways to increase your net worth – outside of marrying rich, scoring an inheritance or winning the lottery.

The Power of Accountability

Producers of “Million Dollar Neighbourhood” have wisely tapped into the power of a like-minded community. Programs like Weight Watchers and AA successfully inspire big life changes by calling on the power of others for support, encouragement and accountability.

The start of a new year is a great time to evaluate your money management skills and own up to where you could use a tune-up or where you can be the teacher – check out your score on Money Management Gauge.

About the Authors: Heather Compton has presented seminars on financial and retirement lifestyle issues for over 30 years. She retired as Vice President and Senior Investment Advisor with a major financial services company. Heather and husband Dennis Blas co-present retirement seminars for a variety of corporate clients and are the co-authors of Retirement Rocks! Canadian Boomers Invest in Life. You can find their book online or in independent bookstores. See more of their advice at Retirement Rocks.

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