Fixing YOUR Finances
9 Steps To Better Money Management
For many people, finances is this hazy subject that they want to avoid. Procrastination just makes the situation worse. To really get in control of YOUR finances you simply have to go through these steps. Stop debt for good!
- Stop Paying Late Fees Where Possible
Late fees are just wasted money. Paying extra just because you send in a credit card bill late doesn't make any sense. Mark you calendar to pay bills on a date where they will arrive on time. It is often better to pay less on time then to pay more late due to bank fees. When you are late, credit cards often increase your interest rate which makes the situation worse.
You can use a online bill pay to always pay on time or possibly get your credit card company to automatically deduct the minimum payment.
Also avoid over limit fees as these are costly.
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- Create a Budget
You know how much you make. You know basic amounts for FIXED costs (rent or morgage, car payments, utilities) and you can make some approximations on other costs (food, entertainment, etc). Before you begin fixing any problem, you need to know what you are doing NOW. Even if you find the outcome is negative, find out where you are so you can fix it. See our article on Creating a Budget that includes a free spreadsheet to start from. It's really easy once you start to do it.
- Determine Every Expense's Worth
Figure out how much an hour you make after taxes. That is, if you make $20,000 a year, you make about $10 an hour. [amount you make divided by 50 weeks a year; then divide that number by 40 hours a week.]
In most states, $10/hour is about $7.50/hour after taxes. Is it worth working for an hour to go to a $7.50 movie?
Apply this method to every expense. How long do you have to work to get a coffee, a dvd, a stereo, a television etc. This helps you understand how much each item costs in YOUR time.
- Avoid Credit Cards: What Types of Credit Do You Use?
Living off of credit cards is the most expensive credit you can find. Often you can consolidate credit cards on a single loan. If you own a house, it will be MUCH less expensive (and possibly tax deductible!). Often you can use student loans instead of credit cards when going through collegs to save finance charges. Consolidate Debt & Save.. This is one of the easiest ways to save money.
- Save Something
The sooner you start saving for retirement, the better. Unless you have a huge credit card debt, consider starting to save NOW. Even $25 a month is a good start.
Ideally you want to have several saving funds:
* Retirement fund
* Emergency fund
* Vacation fund
* Education fund
* House Deposit fund
* Investment fund
Life is full of possibilities. Some of those include things that can be insured. Insuring the BIG stuff is very wise. I would start with house, health and car insurance first. Add on life insurance when you have dependants. Make sure you have enough insurance coverage for emergencies.
- Avoid Impulse Buys
Always wait at least 24 hours before buying something big.
* Look at your budget, can you really afford it?
* Compare prices elsewhere.
* See if there are complaints against the company you are buying from.
* Fully read the contract.
* Get everything in writing.
* Verify shipping charges (if applicable).
* Be very hesistant before signing membership contracts. Are you REALLY going to use the service? These contracts are VERY difficult to get out of and cost alot over the long term.
* Know the refund and/or exchange policy.
* Know the price is rarely only today. Usually, they will have the same deal later. Often, if something is ONLY today, it is a scam.
- Compare Prices
When shopping, compare prices. You can often save 10-20% without changing your lifestyle if you are willing to buy store brands or waiting until items are on sale.
- Spend LESS than you Earn
Now that you know several stategies, spend less than you earn. That is the true key to fixing finances.
About the author: Lorraine Venner learned how to take care of her finances when she started running a jewelry web site.