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Nov 07
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Striking a balance between paying down debt and investing in your future can be difficult in any economy, but an unstable economic climate only seems to exaggerate the problem. No matter your financial situation, you can save money by cutting back in certain areas and concentrating on paying off debt. Don’t abuse your credit cards to live beyond your means. This includes buying groceries, gasoline and other personal items on credit. If you can’t pay for the items from the money in your checking account, you don’t need them. Look for ways to cut back on your grocery bill by using coupons, buying generic, or preparing bulk meals that can be frozen for quick microwavable lunches.
Have a plan for how much you can spend on any given day. It is okay to take a shopping trip, but don’t do it for entertainment. Shopping
for fun only leads to maxed out credit cards and financial stress, so know ahead of time what you can spend and don’t deviate from your shopping list. Start an emergency savings account if you haven’t already done so. You can save money to add to the account while paying down credit card debt and making mortgage payments, but know that it takes discipline.
Skipping your emergency savings account can put you at risk for more difficult times if the car needs a new transmission or the home’s air conditioning breaks down. Even if you think you can get by without making these types of repairs, you can’t skip major medical treatments during an emergency and being stuck with the bill is much less stressful with a rescue fund. In order to maximize your savings, open a high-yield savings account and don’t invest your savings with a bank that will charge you hundreds of dollars in fees each year. Opt for a free checking account at smaller community, regional banks and credit unions.
Online banks are becoming ideal options for anyone wanting to avoid excessive fees and enjoy better interest rates. Compare savings accounts at websites like moneysupermarket.com to get the best deal. No matter what emergencies arise, don’t risk your retirement or your home. It has become commonplace to see commercials on television that claim the benefits of putting your most precious assets up for collateral, but you may end up losing more than you bargained for.
Begin paying down high-interest, high-balance credit cards if you’re not sure where to start. Tackling the most daunting card first will improve your credit faster since high balances are reported negatively to the credit bureaus, even if you make your monthly payments on time. Learn how to rebalance any investments you have. Cash yields have not been great investments recently, but stocks and bonds have enjoyed a good year. If you jumped off the stocks wagon when the economy took a downturn, now is the time to reconsider.
If you have a good credit rating and always pay your credit card balances in full, think about getting a rewards card. This allows you to be compensated in the form of airline miles or even cash back. With any credit card, resist the urge to overspend and continue to pay your balance in full, never spending more than you can afford.
When trying to manage student loans, see if you qualify for an income-based repayment plan. You need to provide proof of hardship, but getting a more manageable payment amount can help you take control of other aspects of your finances. The bottom line is this – stay on top of your monthly payments, regularly contribute to a savings account, IRA or 401(k) and develop healthier spending habits.