Method #7: Automate Your Finances
For the past eighteen months, I’ve been moving toward a system of paperless personal finance. Along the way, I’m learning the value of automating routine transactions. When you make things automatic, you remove the human element, making it more difficult for you to mess things up.

The classic example is overdraft protection. By tying your checking account to your savings account, you have a safety net if you bounce a check. But there are other ways this can work for you. For example, I’ve set up automatic payments with the gas company, the cable company, and my auto insurance company. I also make automatic deposits to my online savings account.

One terrific advantage to automation: when you pay your bills and do your saving and investing automatically, it’s easy to tell how much you have left over to spend at the end of each month!

Tip! Do what works for you. There are few hard-and-fast rules in the world of personal finance. I can suggest methods that have worked for me (and for others), but only you can determine if these methods are appropriate for your own circumstances.

Method #8: Earn Extra Money
You can meet a lot of your financial goals by reducing your spending and using the right tools. But nothing supercharges your progress like a boost in income. How can you earn extra money?

    * Ask for a raise. Several readers have written to tell me how they’ve given themselves a raise through ambition and ingenuity. Here’s one example.
    * Switch employers. Not every employer is able or willing to offer raises, even when they’re merited. If you’re in a position where a raise isn’t possible, consider finding a new employer.
    * Take a second job. Many people find that the best way to get out of a financial hole is to temporarily take a second job. Nobody wants to work more than forty hours per week, but sometimes that’s what’s needed to get out of debt or to save for a house. Just remind yourself that you’re doing this for a short time.
    * Use your hobbies. Yes, it’s possible to have moneymaking hobbies. You’re not going to get rich playing World of Warcraft, but many people use productive hobbies to earn a little extra income.
    * Volunteer for medical research. Last summer, I earned $120 for a couple of hours spent participating in medical research. My colleague Donna Freedman has earned extra cash by giving blood and watching porn (though not at the same time).
    * Sell things. When I decided to get out of debt, one of my first steps was to sell a bunch of the stuff I’d bought with that $35,000. I used eBay, Craigslist, garage sales, and the Amazon Marketplace to sell the things I no longer needed or wanted. The money I earned jump-started my debt reduction.

Another effective way to increase your income is to pursue entrepreneurship. While working to defeat my debt, I started a small computer-consulting business. It didn’t generate a lot of income, but it did provide $2,000 a year that I wouldn’t have had otherwise!

Method #9: Educate Yourself
Knowledge is power. Personal finance doesn’t have to be a mystery. Subscribe to this site. Read other personal finance blogs. I recommend:

    * The Simple Dollar
    * I Will Teach You to Be Rich
    * The members of the Money Scribes network
    * The members of the LifeRemix network

Visit your public library. Borrow money books and self-development manuals. Here are four of my favorites:

    * If you’re in debt and can’t seem to find a way out: How to Get Out of Debt and Live Prosperously
    * If you’d like to know more about investing: The Random Walk Guide to Investing
    * If things are tight and you need to find creative ways to make ends meet: The Complete Tightwad Gazette
    * If you want a motivational manual to prompt you to pursue your goals: The Magic of Thinking Big

You don’t have to agree with everything in a book to get something out of it. I read a lot of personal finance books—some are good, but many are not. Even the worst books usually have one or two things I can pull from them. Learn how to read a personal finance book so that you can pick and choose those pieces appropriate for your life.

Final Thoughts
Taking control of your finances can be intimidating—there’s so much to do—but it doesn’t have to be that way. One effective solution is to take a vacation day from work: designate one specific date as your personal Money Day. Use this day to finally set up Quicken on your computer, to open a retirement account, and to call around for a better deal on your insurance.

The good news is that you can get out of debt. You can save for retirement. If I can do it, so can you. Best wishes for a prosperous new year!

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