By Beth Kobliner, REDBOOK
Start a Financial Plan
Think of this four-week program as the money equivalent of a fat-busting juice cleanse. It's meant to shock you out of your financial rut and put you on a path to better spending habits that'll last forever. Pick a Sunday to get started. You'll use weekends to tackle long-range goals, and complete doable, satisfying challenges on the weekdays. By the end of the month, you'll have a solid budget, way less money stress, and a healthier bank balance. Like any cleanse, you'll see results fast. And you can eat whatever you want... except maybe caviar.30 Day Money Cleanse
The "weigh in": Know what you owe. Make a list of all your debts, along with the interest rate you're paying for each and your monthly payments. Do you have a mortgage? Student loans? A balance on credit cards? Did you buy a sofa on an installment plan? Owe any back payments to the electric company? Write them all down on a sheet of paper or in a Google document.
Now, tally your other monthly expenses. Figure out how much it costs to keep your household running, from groceries to Girl Scouts dues. Add this amount to your debt sheet from yesterday.
Name your main money goal. If you've got high-interest debt, like on credit cards, your plan should be to pay it down, because it's costing you big. (For example, if you owe $3,000 on a card with 16 percent interest, you'll end up paying more than $4,000 if you're making only the minimum payments.) No high-interest debt? Aim toward beefing up your emergency or retirement funds, then saving for a trip or giving more to charity.
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Do the math. Pull out all the numbers you've been jotting down and subtract your debt payments and household expenses from your take-home pay. That's what you have to put toward yesterday's goal, and the "fun money" you can spend on things like eating out. Voilà! Now you have a budget.
Financial date night! Get your partner on board: A recent study found that feeling like a spouse wastes money boosts the risk of divorce by 45 percent. Show him the numbers you've worked up, and agree together on how much you'll put away each month toward your goal. If you're single, write out a contract with yourself, and sign on the dotted line to make it official.
Wrangle your paperwork. Pull out all the receipts, tax returns, bills, and insurance claims you have lying around in various folders, drawers, purses, or envelopes. Stack 'em in a neat pile--you'll need them tomorrow.
Set up a financial filing system. Grab all the stuff you compiled yesterday and organize it. Designate one folder for receipts to get you ready for next year's tax deductions, one for unpaid bills, and others for any categories that make sense for you. If you get some or most of your bills electronically, use the free site manilla.com to organize all of your paperless statements in one place, to keep you on top of bill paying.
Start tracking your spending. An easy way to stick to the budget you set up on Day 4 is to sign up for a free account at mint.com or another budgeting site. Or you can opt for an old-fashioned notebook and use that to log all your expenditures.
Spend nothing today. Your first week was all about getting a grip on exactly where you stand with your bills and outÂstanding debts. Now, it's time to start being more mindful about your purchases with a one-day money "fast." No eating out or ordering in. No quickie trips to Walgreens--and bring your coffee from home. You'll see just how much you could be banking after you detox from all that unconcious spending. (Cash saved: $30--$50)
Go cash-only. An MIT study found that people spend up to twice as much when they pay with a credit card instead of cash, perhaps because handing over cash is more viscerally painful. Leave the cards at home. (Cash saved: $15--$25)
Check your credit. Your credit score is like a report card for your financial life. A high number (anything above 720) typically means you'll be able to get low-interest loans for things like a house or a car, while a low one means you'll have to pay more to borrow money. You're allowed one free report a year from the three major credit-reporting companies at annualcreditreport.com. Or use creditkarma.com for a pretty accurate estimate of your number.
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Shop for the best credit card. Pull out that debt list you made on Day 1 and see if any of your credit cards have interest rates over 16 percent (the national average). If so, think about getting a new one with a lower rate, minimal fees, and easy-to-redeem rewards. If you have a lot of debt, look into a card with a zero-percent rate for balance transfers. More on that tomorrow....
Move some debt around. If you're carrying big credit card balances, consider transferring them to the one with the lowest rate (or to the new one you may have applied for yesterday). If you're debt-free, call all of your card companies and ask for a lower rate. Hey, you're a good customer!
Automate! Accidentally missing a bill's due date can cost you $25 in late fees. Sign up for automatic bill pay for everything from your student loans to your cell-phone service to make sure it never happens again. Bonus: Consistently paying on time is one of the best ways to raise your credit score. Also, set up bank transfers to move a set amount from your checking account into a savings account each month. Since you'll never see this, you'll barely miss it. (Cash saved: $25)
Shop for your lunches for next week. You don't have to brown-bag it forever, but do it five days in a row, to get yourself in the habit. Transfer the money you would've spent (the average is $7.50 a day) to your savings account, and put it toward your main money goal. (Cash saved: $38)
Get cable for less. The average monthly cable bill is about $70, but a few major providers are experimenting with scaled-back packages for about half that. So call yours and ask. And look into HuluPlus or Netflix, which stream a selection of shows and movies for around $8 a month. You'll need a device like a Roku ($99) or Xbox ($199) to connect these services to your TV, but it'll pay for itself in a few months if you're switching from cable. (Cash saved: up to $62)
Give shopping bookmarks the boot. The easier it is to shop, the likelier you are to do it. Comb your web browser's bookmarks folder and remove all those tempting shopping links to sites like Gilt and Overstock. And "un-like" too: A 2010 survey found that more than a third of people who follow a brand on Facebook say it makes them more inclined to purchase that brand.
Try a D.I.Y. mani. If you're a fixture at your nails place, try alternating pro polishes with at-home touch-ups. Stick to a simple color and no one will spot the difference. (Cash saved: $240--$480 a year)Related: Make Easy Money! Here's How
Slash your phone bill. Eight out of 10 people overpay for cell- phone service, meaning they're locked in to a pricier plan than they really need, according to research by billshrink.com. Check your last bill to see how many minutes or texts went unused. If it's a lot, downgrade your plan. (Cash saved: $30)
Cash in those gift cards. The 2009 CARD Act guaranteed that many gift cards can't expire within five years of being issued, but don't let them sit around until the last minute. It's free money! If it's a small value, like for a free frozen yogurt, use it as an excuse to indulge during this month when you're focused on cutting back.
Consider changing banks. Big ones often charge higher fees and have more surprise fines than community banks or credit unions. Consumer Reports found that overdraft fees at smaller banks are typically $7 lower. Find local credit unions at creditunion.coop, or stop into your neighborhood bank for details. (Cash saved: at least $6)
Plug some new numbers into your cell. Having easy access to important phone numbers means you'll be more likely to call for help when you run into problems. So program in customer service lines for your bank, credit card, 401(k), and student loan providers.
Pinpoint your retirement needs. Use the site choosetosave.org/ballpark to get an estimate of how much you'll need to retire the way you want to. No more guessing if you're saving enough!
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Now, make sure you're on schedule. If you have a 401(k), find out what changes you need to make to maximize your investment. Or consider a Roth IRA, where your money will grow tax-free.Day 26:
Learn from your financially solid friends. Research shows that our pals influence everything from our weight to our drinking habits, and that shopping with a thrifty friend could make us much likelier to spend less. Ask one of your pals who seems to have her financial life in order about her saving strategies. Tell her you'd love her support to help you stay on track once the cleanse is over.
Tweak your student loans. The government's little-known Income-Based Repayment plan lets some borrowers make payments based on their family size and earnings, not on what they owe. See if you qualify and learn more at ibrinfo.org. (Cash saved: an estimated $200)
Find out if you're underpaid. This cleanse is only one half of getting your financial life in order; the other is earning more. Compare your salary to industry averages at glassdoor.com or by meeting with other people in your field. If your pay is on the low end, think about what you'll need to do to ask for a raise.
Purse purge! You've already tidied up your spending habits--now it's time to slim your wallet. Toss old receipts once they've shown up on your statements, and carry only one credit card. Remove your Social Security card; carrying it around makes you vulnerable to identity theft.
Your day of appreciation! You've organized, scrutinized, and smartened up your money life in just 30 days. Now it's time to pat your-self on the back. Plan a potluck dinner party, and brag about your progress. Ka-ching! (Or should we say Ka-cheers?)
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Permissions: Reprinted with permission of Hearst Communications, Inc.