As we near December 31st, many people are making their New Year's resolutions. I've never been a fan of resolutions, but last year my pants were getting tight in October and weren't helped by so many holiday treats. I made the decision to get in better shape. It was really more of a goal than a resolution but I digress. I bought a $20 Groupon to try out CKO Kickboxing for 6 classes and after my first class, I was totally hooked. I loved hitting the heavy bag and have been going twice a week ever since. In conjunction, I also focused on eating clean and enjoy having salad during most weekday lunches. I'm happy to report that after a year, my pants are no longer tight around the waist. The funny thing is that I've actually gained weight over last year but it is now muscle instead of fat. This year I'm tempted to write out more formal resolutions and goals to see what I can accomplish.
Since I write mainly about financial topics, today I will focus on 3 actionable tips to help you get financially fit in 2018. I know that many of you are worried that I'm going to go into budgets, planning, emergency funds, 401ks and other boring crap. But worry not, I won't mention any of these terms. I promise. Let's jump into the good stuff!
1) Get paid to spend
See I told you I wasn't going to talk about budgets. Here I'm telling you to spend, but spend intelligently. Maximize your credit card rewards by using the right card for each purchase. Some cards offer high rewards on gas, while others offer it on groceries. This year I opened an Amazon rewards card because 1) I order way too much stuff from Amazon and 2) you get 5% cash back on all your Amazon purchases and they even had some additional 20% cash back offers during the holidays. Credit card rewards are a great way to earn while you spend as long as you pay off your credit card bills at the end of each month.
I also have been an advocate of shopping through Upromise (or Ebates) which saves 5%+ by clicking through their portal on many online retailers. In addition, when combined with their Upromise credit card, you can save an additional 5%. This has put thousands of dollars into my daughter Chloe's 529 plan! It's a no brainer for parents looking to consistently fund a 529 plan.
2) Cut the cord on cable (and ADT)
Yes, it is time to cut the cord on cable TV. Don't be afraid. I cut the cord on cable over 3 years ago and I will never go back. If you are a sports fanatic, it may be a bit more challenging but if not, there is no reason to pay for the hundreds of channels that you aren't watching. Today there are so many steaming options like YouTube TV, Hulu, Netflix, HBO Go and Amazon Prime. Before I was paying close to $190/month for the Comcast triple play and today I pay $45 for Fios Internet plus $11 for Netflix. Not only did we save money but it is fun to call to cancel and kiss cable TV goodbye forever.
This month, I had a similar decision to make on ADT home security. Not only did they have me in a 3-year contract but they raised prices every year for the same exact service. I was paying over $65/month for home monitoring during my last year of my contract. I knew I was getting ripped off. After extensive research, I signed up with Alarm Relay which uses my existing alarm system and they charge just $9/month if you have a landline or $19 for cellular. I just cut my monthly cost by 70%!
3) Manufacture spend (and earn good karma) by making Kiva loans
You may be asking yourself: what is manufactured spend? And what is a Kiva loan? Let's start out with latter which I've covered in several blog posts. I have been making micro loans to the developing world on Kiva.org, an incredible microfinancing online platform, for over 10 years now. You don't earn a monetary return on any loans made on Kiva but the true return is priceless. I used money that otherwise sat idle in a savings account and moved that productively into the global economy which could potentially improve lives over and over again. That is the power of capitalism. It is the ripple effect of people empowering themselves and their families. The more they make, the more they spend and the economy grows.
That leads to another benefit of making loans on Kiva: you can manufacture spend. What is that? Manufactured spend refers to finding ways to spend money with your credit card and get the money back as cash. Why would you want to do this? There are several reasons like you may need to meet spend requirements on new credit cards to earn signup bonuses or perhaps you want to earn high level elite status or big spend bonuses.
Here is my personal example. This past spring, we decided to take a family trip to Puerto Rico and I was tempted by the St. Regis Bahia Beach Resort which was over $800/night and that was unaffordable. However, I'm a Starwood Preferred Member and I have an Amex Starwood Card. I didn't have enough points so I made Kiva loans to cover the difference.
Here's my scorecard:
1) I made loans on Kiva and earned Starwood points with my Amex.
2) Kiva borrowers could fund and grow their businesses with my capital.
3) I stayed at a 5 star resort for free using Starwood points.
4) I was paid back within 8-12 months on my Kiva loans.
It is cool how you can make your money work for you and also reap the rewards.
Note that Kiva loans are not risk free but if you are smart about it, the risk is very small – the default rate has been just 0.18% on over 2500 loans. Also your money is tied up for 8+ months – some loans pay back monthly while others pay at the end of term.
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One more bonus tip from my 3 unique and unusual tips to be financially fit in 2015:
Buy Experiences, Not Products
You often hear that money can't buy happiness. However behavioral science begs to differ. Research shows that money can make us happier, but only if we spend it in particular ways. Author Michael Norton, an associate professor at Harvard Business School, describes it like this:
One of the most common things people do with their money is get stuff. But we have shown… in research that stuff isn't good for you. It doesn't make you unhappy, but it doesn't make you happy. But one thing that does make us happy is an experience.
So spend your hard earned dollars wisely. Don't buy the latest handbag, car or TV. Buy an experience that you can draw on for years to come. Take a trip that will change your life for the better. Expand your worldview. Backpack around Europe with friends visiting seven countries in thirty days. Sip Sangria in Plaça Reial in the middle of Barcelona and when you ask the waiter to take your picture, you wind up with a photo of the waiter instead and your friends in the background. Now that is worth a lifetime of memories.
I hope you enjoyed my 3 unique and usual tips to be financially fit in 2018. I hope that you create some incredible memories in the New Year!
Header photo from Unsplash Samuel Girven