With all the economic uncertainty these days, there’s never been a better time to get your finances in order. You can’t control what the government or the markets are doing, but you can take matters into your own hands when it comes to your debt, savings, investments and monthly bills.
If you feel like your financial picture is bleak, take comfort in knowing there is always something you can do about it, no matter how much money you have in the bank. Consider the following strategies and see which ones you can take on today:
Stop building your pile of debt.
This can be tough, especially if you’re relying on credit cards to get by. Figure out how you can make more money (get a raise, a second job, or a side gig) or how you can cut expenses. Do you really need that $95 cell phone plan, or your daily lattes? Figure out cheaper ways to entertain yourself, like hiking, reading library books, and having picnics and potlucks.
Cut up your credit cards, if you’re really bold.
Don’t cancel them, because that could have a negative effect on your credit rating: ideally, you want to have a few cards but not use them often, and pay off the balance each month. The more available credit you have, the better.
Go through all your paperwork, making sure you don’t have any unpaid bills.
Set up auto-payments for regular bills, and set reminders in your phone or dayplanner so you know when they’re coming up and can make sure the money is in your account.
Check your credit report.
Clear up any errors, and negotiate with creditors to make immediate payments in exchange for getting any black marks on your report removed or downgraded so they’re less damaging. Creditors are often willing to reduce the amounts owed if you have accounts outstanding.
Open a savings account and build an emergency fund.
Ideally, it should have enough money to get you through 6 months of regular expenses (rent, food, etc.) This money is for emergencies only, to be used if you lose your job or need to make a major car or house repair. Having this money will give you peace of mind and help you avoid getting further into debt when the unexpected happens.
Make a realistic plan to pay off all of your debts.
Make the minimum interest payment on every debt, and then put as much money as possible towards one debt at a time until the balance is zero. Some people start with the debt that has the highest interest rate, which makes sense because you’re paying the most for that one. On the other hand, paying off the debts with the smallest balance first will give you a more immediate sense of satisfaction, making it more likely you will stick with your repayment plan.