It’s a dilemma that seems to be plaguing everyone to some degree these days. Yes, we are talking about credit card debt. Millions of Americans are affected by this type of financial debt. For some, it’s just personal debt, but for others, it may be personal AND business debt.
Either way, it spells bad news for the one who feels buried in it. But the good news is there are plenty of things that anyone can do to improve their situation when faced with mounting debt.
For those who are looking for some ways to boost their financial well-being this year, you’ve come to the right place! Let’s find out how you can conquer your debt right now!
1. Start Saving Now –
It happens to everyone; many start out strong and save a few hundred dollars, then a vacation or an emergency pops up and throws them off track. One way to start seriously saving money is to automate savings. There are dozens of apps that automatically transfer small amounts to a high-interest savings account without the account owner even noticing. This “set it and forget it” approach takes all the effort out of saving. Set this up into an account that is not easily accessible such as an online savings account.
2. Set Up A Retirement Account –
Saving for upcoming expenses is important, but saving for the future is vital. Many workplaces offer 401K matches should the employee contribute the minimum amount. Contributing the minimum amount needed to earn the employer match is a great way to boost retirement savings. The best part is that retirement savings for 401K’s reduce taxable income, which can save those who take advantage even more money during tax time.
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3. Pay Down Debt –
This is one goal that will likely be found on everyone’s list. In order to really tackle mountains of debt, many people take on a side hustle or a second job. Some people drive for ride-share companies such as Uber or Lyft for some extra cash to pay down debts. There are more opportunities than ever to earn some extra income that can be used to reduce debt. Other options are curbside shopping or delivery services, freelance writing, or picking up single shifts from places around town. Many restaurants are short-staffed right now and would gladly use the extra help.
Another way many people tackle debt is to start with paying off their smallest debt first and pay the minimum amount on all other accounts. They put as much extra money as they can into paying off the smallest debt and then move on to their next smallest debt. This creates a debt snowball effect, and lots of people have had success with paying down their debt with this method.
By far, the BEST way to pay down debt is to reach out to a non-profit credit counseling agency. Their Debt Management Program might be just what you need to help you get rid of your debt for good. The counseling services are always free and the monthly service fee is minimal. The creditors will give you certain concessions while on the program such as lower interest rates (sometimes down to ZERO) and no late or over-limit fees. These concessions can reduce your monthly payment and help you get out of debt much more quickly than doing it all on your own. This is definitely an option everyone should check out to see if it makes sense for their financial situation.
4. Create A Household Budget –
For folks who don’t have enough time to take on a side gig, creating a budget can help improve most financial situations. There are tons of Smartphone Apps and websites that can help create a budget, but the first step is to account for all income and debts. Every year, each person is entitled to a free copy of their credit report from each of the credit bureaus by visiting www.annualcreditreport.com. Using this as a guide to creating a budget can help determine how much to allocate to debts and how much to allocate to other bills and necessities.
Sticking to a budget can be very difficult. Unexpected expenses always tend to turn up. Cutting costs wherever it is possible will go a long way in helping stick to a budget. Doing small things like meal planning and prepping can reduce the amount of money spent on food, and cooking at home saves money that would otherwise be spent on tipping at restaurants. Cutting cable is another great way to save some money, especially with several streaming services available that can provide the same entertainment for a fraction of the cost.
5. Current Financial Overview –
The first step of preparing for next year’s finances is to understand the current financial picture. This is the easiest part of the whole process because it does not involve changing anything. The only goal is to look and get a clear picture of where your money is going.
Start by opening up your main bank accounts and investment portfolios. Look at how your net worth has gone up or down over the course of the year. If you had set goals at the beginning of the year, now is a good time to compare your real results to what you’d hoped for. Did you meet your goals or fall short?
Make sure to open up any small accounts you might have forgotten about. If you have an old checking account you haven’t used in six months, take a look just to be sure nothing is wrong there. You could make a list if you have any financial accounts or cards that you want to close.
6. Eliminate Expenses –
It’s astonishing how quickly we can rack up expenses. Gym memberships, TV subscriptions, meal planning subscriptions, monthly makeup boxes, and a host of other auto-billing services regularly dip into your bank account and take away your hard-earned money. This is fine if you have the extra money and enjoy the service. Just don’t let them keep charging you when you stop using whatever you are paying for or if things become too tight.
When you haven’t watched cable TV in months, cancel it. If your gym membership makes you feel guilty, but you never actually go, cancel it. Whatever you are paying for and not using, get rid of it. You can easily shake up an extra $100 to $200 per month just by canceling your unused services, memberships, and subscriptions.
7. Calculate Your Taxes Today –
You can start preparing your tax statements at the end of the year. It’s best not to actually do any of the final math or fill out the statements yet because things could change in the last month or two. Instead, you should just look at your income and taxes paid so far to see what you can expect on your tax return.
This will give you an early warning in the unfortunate event that you OWE money come tax season. It’s better to realize you are $1,000 short on taxes in July than in March or April. Ideally, you won’t ever be surprised with a tax bill, but it’s better to discover it early than late.
If you are expecting a healthy tax return, it’s fun to find out about that too. You can account for that money and have a plan way ahead of time. This helps to avoid impulse spending that occurs when a lump sum of unexpected money drops into your account. Consider using your return to pay off debts or get ahead on your retirement fund. These are the simplest ways to fast-forward your path towards financial freedom.
8. Set Investment Goals –
Investing is one of the great joys of life. As a reward for being patient and putting your money to good use, you are able to grow your net worth until you have financial independence. Good investing rewards you and passes on that reward to future generations. It’s good to set investment goals before the end of the year. This enables you and your family to hit the ground running. Don’t be too risky with your goals. Slow and steady wins the race!
9. Start On Future Finances –
The best time to plan your financial future is ahead of time! Getting your personal finances under control is one of the most important aspects of mental health and clarity. It’s nearly impossible to be happy without a firm financial foundation. Use the tips in this article to start your year-end financial planning and set yourself up for a great year.
10. Have A Plan –
The first step for anyone determined to get out of debt is to put together a plan. Now is the time for them to figure out which creditors can be placed on the back burner for a while and which ones simply can’t wait. It’s also a good idea for them to begin paying down the debts with the highest interest rates first. Also, it never hurts to call the credit card companies yourself to see if they might be willing to lower your interest rate.
You are not going to go anywhere fast without a game plan. Meet with a non-profit credit counselor who will help you lay out a plan for getting out of debt and improving your finances in the years to come. This is something that can help you out immensely, especially if you simply don’t know what to do about the debt that you are currently dealing with. The phone call to a non-profit credit counseling agency is free and completely confidential. You literally have nothing to lose by making the call and speaking to a certified credit counselor. They are there to help you with great free advice and guidance.
11. Get Organized –
Those who want to get out of debt should really sit down and comb over everything they owe. Organizing exactly how much they owe will really give them a clear vision of the task ahead. Seeing the bottom line of what they owe might sound scary, but it’s a bridge that must be crossed if things are ever going to get better.
Taxes are something that stresses most people out, and it’s usually because they aren’t organized, and they don’t know where all the receipts went. Get a head start, so you aren’t as anxious about taxes. Too many people put off doing their taxes and get swamped at the last minute, and this means that you are not thinking about the deductions that you could be taking. You might miss out on tax break opportunities. Get organized for taxes, and you’ll have less stress when tax time rolls around.
Getting organized also helps you realize how much clutter you have and so many “things” that you’ve purchased and maybe never used or have only used once or twice. It shows us how much we consume without first thinking about it. You could also sell unwanted or unused items to make extra money to help you pay off some debt. Getting organized has many benefits, but improving your finances and fattening up your wallet may be the most important of them all.
12. Stop Using Credit Cards –
People are bombarded everywhere with the temptation to utilize credit card services. But if someone is going to get out of debt, this step must also be fulfilled. You are essentially borrowing money whenever you use a credit card. Some debt relief companies may recommend keeping one credit card for emergencies, but it should not be used unless absolutely necessary. This temptation may prove too much for some individuals. If a person has some self-control issues with credit card use, then the only way to be certain this will not be a problem is to get rid of all the credit cards. For some, every credit card should be destroyed as in cut up so it can’t ever be used again. They can use cash or a debit card for things like paying bills or making occasional electronic payments for necessities.
If you’re someone who is trying to repair your credit and you’re not deeply in debt, it might be worth your while to take out a credit card and start using it to make some small purchases and then paying the balance in full every month. If you don’t have any credit cards, check out secured cards first because they have fewer restrictions. Having no credit at all is actually worse than having poor or even bad credit. Now, this does not mean that you should spend it without a plan. The problem is that an unused credit card in your pocket does not do anything. Instead, use it to pay for regular items like your grocery bill or your gas and simply pay it off immediately in full each billing cycle. Pay it on-time, each and every month.
13. Set Long-term Financial Goals –
Whether you want to reduce your debt by half or eliminate it entirely, set a big goal that you can reach for. It’s also a good idea to set smaller goals to help keep you motivated and excited. These smaller, more attainable goals will make it easier for you to stay on course throughout the rest of the year! An example of a smaller goal would be to save $25-$50 every month and put it into a savings account for an emergency.
14. Avoid Living Large –
This one should be a no-brainer for anyone trying to get out of debt. However, it may be more a matter of willpower than knowledge. As they say, “old habits die hard.” For most, this means cutting back on eating out every night, getting rid of the expensive cable TV, mowing their own lawn, etc. Literally doing anything that leaves more money each month for paying down their debt is a must. One big help with overcoming the temptations of living in extravagance is for those trying to pay off debt to keep reminding themselves of the food, rent, health care premiums, and gas or transportation expenses that they must pay.
15. Become Finance Savvy –
The more knowledgeable you are about a certain subject (finances), the more at ease you are with making decisions and handling things. You don’t have to be a stockbroker, banker, or financial guru in debt relief solutions. Just learn the basics and what works for you. Research how credit actually works and learn to use it wisely. The more financial knowledge you have, the stronger your financial position will be because you won’t second-guess your decisions all the time.
16. Think About A Credit Union –
Banks can be incredibly varied on the rules that they follow and the fees that they impose. If you want things to be a lot simpler, think about joining a credit union. While a credit union typically requires you to meet some kind of specification, it’s worth finding one that suits you for the lower rates on loans and the higher interest rates on your savings account.
Conclusion –
There’s no time like the present to work on improving your personal finances. By planning and monitoring your spending throughout the year, you can get a handle on your finances and not feel guilty when yet another new year approaches. The time to start is right now!
If you ever need help with financial planning, setting up a budget, or getting your debt under control, we are only a phone call or click away. Call us today at 1-866-699-2227 or visit us online at www.advantageccs.org, and we’d be happy to help!
