Managing money and maintaining financial stability is challenging, especially for those knee deep in debt. Sometimes the best course of action is starting fresh with a blank slate.
Here are five easy steps to restoring your control over your finances without turning your life upside down:
- Understand Your Debt
Too often, people with a significant amount of debt are only paying off interest instead of the principle. Plus, when inundated under a mound of debt, it can be difficult to figure out a game plan of how to get a handle of debt and actually make headway in paying it down.
First things first, create a spreadsheet of your debt. Include the amount you owe, when it’s estimated you will pay it off, and the amount of interest accruing. Being able to see all of your debt side by side allows you to physically recognize how much you owe.
From this point, determine how you want to pay it off. There are multiple options from paying the ones with the highest interest off first, starting with the smallest loans in order to decrease the amount of outstanding loans you have, consolidating (if possible) loans to one lender, or using a low interest loan from a company like TitleMax to pay off a high interest loan.
- Choose A Bank
Find a bank that is better suited to your needs. While larger banks are more convenient and usually do not charge ATM fees, smaller banks sometimes offer lower fees in certain areas. For the traveler, a larger bank is probably a smarter choice while someone who rarely uses cash should consider a smaller bank near him or her.
- Stop Paying For Unnecessary Items
If looking to overhaul your finances in order to save more than you spend, cut out the unnecessary, money-hogging items like cable bills, gym memberships, daily take-out, and morning stops at the nearest coffee shop.
Instead, use rabbit ears for basic channels, choose an outdoor activity like biking or hiking, teach yourself how to cook, and invest in a cheap drip coffee maker. These minimal changes result in maximizing your savings.
- Upgrade Your Credit Card
Many credit cards have a rewards system attached that can generate you more profit. There are travel credit cards, cash back credit cards, cards that offer gift cards to your favorite stores, etc. Choose the right one to suit your lifestyle. For example, a traveling writer might use a credit card that racks up frequent flyer miles and free hotel stays in order to maximize his paycheck.
- Retirement Fund
Most Americans have not yet calculated how much they will need to save for retirement, which leaves many at retirement age without a sufficient amount of funds to sustain them. By using an online calculator to find the right number, you can begin saving early, which will turn into a nice nest egg by the time retirement nears.
These quick and easy financial changes can dramatically transform your financial well being from unknown to stable.