As we go into the holiday season many of us are enjoying the fruits of our labour over the past year. Unfortunately January 1st is often a day of reckoning when the reality of Christmas spending comes home to roost. Credit card bills come in higher than expected, dinners out and lavish gifts all add up, and with all of the macro-economic uncertainty out there in the world people often take a good long look at their finances and make a decision to improve things.
We see certain trends developing early in the New Year every year. For example, debt consolidation inquiries go through the roof in January. Often people who own homes have equity that they can use to pay off higher interest-rate personal loans and credit cards. This can be an effective debt management structure, if implemented correctly.
Still others look to bolster their investment portfolios by accessing available equity and implementing conservative leverage strategies like the Smith Manoeuvre.
Much like a New Year’s Resolution to eat better or to work out more to improve our physical health, a good plan to improve your financial health should include professional advice – or at least a guide of some kind. I came across an article in the Financial Post about a millionaire teacher that offers some excellent advice for all Canadians on how to build wealth in spite of what is going on in the world economy. Here’s a snippet:
Hallam’s 9 Rules of Wealth
Rule 1 is to spend like you want to grow rich, which means cultivating frugality whether buying homes, cars or daily items.
Rule 2 is to take advantage of compound interest by starting investing as early in life as possible — but only after high-interest debt is eliminated. (I agree!)
Rule 3 recaps the negative impact of high fees and thus the case for indexing: “Small percentages pack big punches.” Here he takes a skeptical view of the motivations of the financial services industry generally.
Rule 4 is to “Conquer the enemy in the mirror.” It looks at the problems of stock-picking and market timing, fear, greed and other emotions that can sabotage investing.
Check out the article to read the rest and please consider, if you haven’t already, a financial tuneup in 2012. It’s something we all need from time to time and it’s one of those things that doesn’t start itself. The sooner you get on it the sooner you’ll start to see results.
You can learn more by visiting The Millionaire Teacher website
From all of us at First Foundation, we wish you all the best this holiday season and much success and prosperity in 2012!