- Personal Finance
7 Tips For Getting On Solid Financial Ground
Do you worry about money? Is your debt or spending out of control? Is there more month left at the end of your money? Do you live paycheck to paycheck? Do you borrow from one credit card to pay another? If you answered yes to any or all of these questions, then the chances are good that you are not on solid financial ground. These days, more and more people are on shaky ground when it comes to their money. Here are seven tips to help you get on solid financial ground.
- Know where you are at financially. It is easy to get overwhelmed with life and money (or lack of it) and even easier to just ignore your entire financial life. This is exactly the wrong thing to do though. If you ever want to not worry about money, then you have to know all the details of your money situation. Write it down - all of it. Write down how much income you bring in each month; write down all of your bills, and all of your debts. Not just the monthly payment, but the total amount of all your debts. Are you current or behind on bills? You need to know so that you can fix it.
- Make a plan to improve your situation. Every person's plan will be different. Maybe you need to catch up on medical bills that are past due. Maybe you are current on everything, but barely squeaking by each month. Maybe you need to stop extra spending. You might even need to get a new job. Sometimes you can do everything right and still not be able to make ends meet. Sometimes you just need to raise your income. Take a hard look at what you wrote down regarding your financial life and figure out what you need to do to improve it.
- Get rid of your debt. Debt will hold you back in every area of your life. They say money can't buy happiness, but a lack of it can certainly cause misery. The more money you owe other people the less money you have for yourself. The less money you have for essentials and wants. When you make your plan, figure out a way to pay off any and all debt.
- Don't take on any new debt. Like I said above, when you owe people money it limits you and can quickly make you miserable. Take a stand and refuse to take on any new debt (OK, a reasonable mortgage in my book is almost always unavoidable, but that is it!).
- Start a savings account and set up automatic savings each month or each time you get paid. Life happens and in my life it means unexpected things and frequently emergencies. If we didn't have a savings account these things would most often be paid for with a credit card. This is not a good way to live. Even if you can only put in $10 at a time, it will add up quicker than you think. Plus it is just the habit of saving money each month that you want to get into. You have to have a cushion to cover unexpected expenses if you want to stay out of debt.
- Start living within your means. This means that you cannot, under any circumstances spend more money than you make each month. Spending more than you bring in leads to disaster and lots of debt. If there is no way for you to pay back your debt and save a little each month on your current take home pay then you need to bring in more money. This could mean taking on a second job, asking for a raise, or getting a new job entirely.
- Make some goals. This goes along with the plan. If you only have the end result in your plan, you likely won't get there. You need to set reasonable, attainable goals along the way. You need guidance in getting back on solid ground. Life might happen and cause things to not go as smoothly as it looks like it should on paper, but with a plan and goals in place then you can get back on track quickly. There are steps you must take to make your plan happen. It is up to you to figure out what those steps are, but it might look something like this.
- By April 1st be current on all bills.
- By May 1st set up an automatic savings plan.
- By June 1st start repaying debt using the debt snowball method.
- By December 1st, credit card #1 is paid off.
- By the end of the first year on your new financial plan you will have $1,000 in the bank and $8,000 less in debt.
- And so on.
Not being sure how you are going to pay the bills, take your child to the doctor, or put food on the table is not a fun place to be in. Shaky financial ground is risky and dangerous. If you live paycheck to paycheck then you are probably just one unexpected expense or emergency away from losing everything. It will be tough to get back on track, but it is a must. You have to figure out how to get on solid ground financially or you could lose everything. Use these tips to help you get started. Your life will be much less stressful when you can stop worrying about money all the time.