Tips For Getting Your Financial House In Order
If debt collectors are the ones making your phone ring, you may feel that you don’t have enough money to actually budget your way out of debt. But you do. All that’s needed is a plan of attack. In this article, we’ll share a few bits of wisdom that have proven to help people in situations much worse than yours battle their way back from the debt cliff.
Get It On Paper and Make a Plan
As depressing as it may be, make a list of all of the debt that you owe. This gives you a bird’s eye view of the situation. As you’re listing your debts, be sure to include:
- How much is owed
- Interest rates you’re paying
- Minimum payment accepted
With everything laid out in front of you, you’re ready to attack. Prioritize the debt by interest rate being charged – go from highest to the lowest. The ones with the highest rates are your first priority.
Make and Contribute to an Emergency Fund
Generally speaking, it’s a good idea to have at least $1,000-2,000 tucked away in an emergency fund. This may sound pretty daunting at first but you’d be surprised just how quickly you get there by making a few simple life changes.. Great ways to build up your emergency fund can include
- Supplementing your income with a part-time or freelance job
- Moving any money left over at the end of a pay period directly to your savings
- Automatically deducting a certain amount (it could even be $25) of each paycheck to your savings account
- Analyzing where all of your money is going and commit to cutting anything that isn’t absolutely necessary
- Refraining from spending any coins you receive – instead, place all change in a designated jar; when it’s full, take it to the bank and cash-in
- Refinance your mortgage or automobile loan
- Avoid going to restaurants and movies
Don’t Miss Out on Free Money at Work
Most companies offer a 401k match or similar plan. It’s in your best interested to contribute enough so that you’re getting the full match from your employer. It literally is free money.
Make Sure You Have Insurance
Being in debt is bad enough. Just think how much worse off you’d be in the event of a life-altering mishap. Health insurance, life insurance and long-term disability insurance are absolute essentials in navigating your way safely through life.
You may think of investing as a rich person’s game, but you’d be wrong. Investing as little as $50 per month in a Roth IRA. The beauty of a Roth IRA is that any gains or withdrawals will be taxed.
Is Bankruptcy Your Best Option?
Getting out of debt is not nearly as much fun as getting in debt. Debt is indeed serious business and should be treated as such. In some cases, declaring bankruptcy may be your best option. If you’d like to discuss it, we encourage you to contact the offices of Statewide Bankruptcy at (602) 225-2222 for a free consultation.