How much stress would be reduced from your life if you didn’t have any debt? Even though the move towards financial fitness is never easy, it’s definitely a journey worth making. If your financial house could use a makeover, here are a few tips that may help:
Start By Updating Your Budget
Are you spending more than you earn? Do you have a budget in place? When you formulate your budget, you can see where you need to reduce expenses. You may also find some expenses that could be eliminated altogether. Analyze your spending pattern so you can make informed choices on how to allocate your money. Obviously you will need to pay for housing, transportation, food, and insurance
but you may decide that cutting back on a few wants can help you achieve your financial goals more quickly.
Put Away The Credit Card
Even though it may be hard to resist the temptation of using your credit card when making a purchase, if you want to get your finances in order you will need to stop using debt. Switching to a cash only basis means you won’t have credit cards bills to deal with next month. You must only spend money that you already have – not money you plan to have in the future.
Ax The Debt
Once you can get yourself to stop accumulating more debt, you need to make a plan to get rid of the debt you already have. Gather all your debts together and make a grand total. Then, plan how you will pay them off. You may choose to start with the highest interest rate debt first. Slash your spending to put as much money as is feasible towards your debt payments. To come up with additional income consider working overtime, taking a second job, having a garage sale, or selling items on eBay or through Amazon.
Establish an Emergency Fund
An emergency fund can help to keep you from incurring additional debt. Once you’ve paid off some of your current debts, try setting aside some extra money for emergency expenses like car repairs, medical bills, etc. This will help to eliminate you having to use debt (i.e. your credit card) to pay for these types of expenses. Having a financial cushion to lean on goes a long way in reducing financial related worries.