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This is a guest post from Joe Johnson
Not thinking about your debt, not sticking to a budget, and not controlling your spending patterns will only lead you down a path of despair. To enjoy your life and in your elder years, it is important to face your financial status and make plans to free yourself from companies that thrive on keeping you in debt for its own gains.
Take some steps, no matter how small, on the road to decreasing debt so that more of your money can be saved for things you truly enjoy doing, unexpected emergencies, or for an early retirement. Life shouldn’t be wasted worrying about money; it should be wasted on pure happiness. Take control of your future with these 7 tips.
1) Eliminate the use of credit cards.
Live on the money that you earn. It’s a false sense of wealth when you receive and use credit cards with high limits. Credit card companies will always entice you with spending more by increasing your credit limit, offering low introduction rates followed by high interest rates, and easy to use pre-printed checks.
Take it and dump it in the trash. Credit cards are often useful for renting vehicles, as it provides rental car insurance. Ensure that you make the final payment with a debit card or cash. If you can’t trust yourself to pay off the credit card balance each month, then don’t consider using it. With the wide-acceptance of debit card that can be used as credit cards, there is no need to have more than one credit card. In addition to paying with a debit card, you can also use the best personal checks to ensure you are spending what you do have.
2) Establish an emergency fund for unexpected expenses.
This fund is strictly for emergencies only, and not something to be used for special occasion holiday or birthday gifts. It is for life’s unexpected expenses, such as your car breaking down, or an unexpected medical expense. Deposit a set amount from each pay check to create this fund. If not used for emergencies, it can always be a nice savings for retirement.
3) Establish an account for living expenses.
Take a percentage of the monies earned on your paycheck, usually around 10 percent, and deposit into another savings account. The total amount saved should be equal to no less than six months of your current annual salary. This fund can be used in the event you become unemployed or disabled. It provides the financial security in the unforeseen events of life.
4) If you have a lot of credit card debt, consider consolidating it.
Out of all the credit card offers that you receive, choose one that offers a zero percent interest rate for credit debt transfers. It is usually offered anyway from 6 to 12 months. If your debt is larger than what is allotted on low interest credit card, you may consider obtaining a consolidated loan from a financial institution that has much lower interest rates than you are probably paying on the credit cards.
5) Stick to a monthly spending budget.
Following your financial budget each month will keep you on track to financial stability. The extra monies saved each month should be applied to any outstanding debt.
6) Establish a debt free life.
Remain dedicated to your budget and pay for items in cash. Manage your money well by paying close attention to your bills and expenditures, and always ensuring that your income is above your expenditures.
7) Always shop with a list.
Whether you are shopping for groceries, household items, home repair items, gifts, or clothing, always create a list before leaving for the store. This simple process will keep you on track with your budget and your needs. Once you have gotten everything on your list, head to the cashier and pay for your purchases. Don’t linger and browse in a store, as this will only add to your temptation to spend more than you need to. Review your budget monthly, create reserve savings accounts, make purchases with a debit card or with cheap personalized checks, and invest in retirement plans. Being smart with your money means many years of wealth and happiness in an unpredictable economy.
About the Author: Residing in Minnesota, Joe Johnson has been active in online communities for over 15 years. He enjoys helping families and individuals understand the importance of personal finances, such as saving and budgeting money, by contributing articles to related online web sites.