Monday, October 13, 2014, AM | 2 Comments
From student loans to using credit cards, it can be easy to acquire debt that can take years to pay off. For many people, it can be difficult to have financial freedom and repay what is owed within a realistic time frame.
To regain control of your finances and strengthen your relationship with money, there are a few practical changes to make immediately.
Establish a Plan
To repay your debt in a realistic time frame, it’s important to establish a plan before you begin tackling the payments that are made.
Calculate how much you owe with credit cards and loans before determining what you can afford to repay each month. This will help you understand what loans have the most interest and what should be paid off first.
Making a solid plan will also give you an end goal and milestones to get yourself out of debt.
To reduce your spending habits and prevent splurging, begin to use cash when shopping for groceries or purchasing fuel for your car.
Using cash will allow you to value your money more and physically see how much you have left until payday. It also forces you to not overspend and to stay within your budget.
Spending cash will mean you are not using your credit card to accrue more debt and interest.
Cut Out Luxuries
Establish a budget to have guidelines on where each dollar will be spent during the month with a significant amount put towards the debt.
Cut out luxuries or spontaneous spending, which includes visiting the nail salon or buying coffee on your way to work.
Many people often don’t realize that small, everyday purchases aren’t really needed and quickly add up over time.
Talk to a Financial Expert
Allow a financial expert to evaluate your situation and offer advice on the options that are available. You’ll be able to find alternatives to filing for bankruptcy and receive credit counseling.
Having a professional help in stressful and serious financial situations can give you the guidance and plan you need.
Negotiate Interest Rates
As you repay the debt that you owe on various accounts, ask lenders to reduce the interest rates, which can allow you to repay the debt in a shorter time frame.
Begin by repaying the accounts that have the highest interest rates, which will prevent spending more each month until you’re debt-free.
Create an Emergency Fund
To prevent acquiring more debt, create an emergency fund to use when the unexpected occurs.
From car repairs to medical bills, there are often times when a significant amount of money is needed at the last minute.
Save at least $1,000 and refill the fund as soon as possible whenever it is used.
When it comes to overcoming financial issues that are commonly faced, there are a number of ways to regain your standing and become in control of your spending.
By reducing your debt with an established plan, it will quickly lead to financial freedom and long-term peace of mind.
Informational credit to Paddon & Yorke Inc.