As much as we don’t like to think about money, or how little there always seems to be, the truth remains: money matters. Even the best-intentioned budgets can quickly spiral out of control if unexpected extra expenses begin to pile up such as car repairs, emergency home improvements, or overdue taxes. It can begin to feel overwhelming, but there are ways to arm yourself so that you don’t feel like you’re losing your grasp on your finances.
If you’re already thinking about how to get a hold on your financial situation or get things back on track, then you’ve already taken a step in the right direction. Facing the problem head on may seem like a difficult thing to do, but ignoring the problem is much worse. Here are a few action items to get you motivated and make you feel more in control.
Step 1: Prepare a budget
Some people like to use different online calculators or programs to help balance their budget. Others prefer to track their spending via a monthly Excel spreadsheet. Whatever is proven to work for you is what’s best.
If you’re just starting to think about your monthly budget, write out every expense you have during the month. This includes rent/mortgage payments, utilities, food, and gas money. Any “extras” like going to the movies or dining out should go into a separate section.
You need to take a good, hard look at what you need versus what you want. They don’t belong in the same category. Your monthly income should go towards your need pile first and then be divvied up among your want pile later.
Step 2: Create a debt-busting plan
If you have several outstanding debts, it can feel like you’ll never pay any of them down. Make a list of all your debt including loans and credit cards along with the interest rates for each. Continue to pay at least the monthly payments for each of your debts to avoid late fees.
Debt continues to accrue and increase when you miss a payment. Also, add extra to your top debt, the one with the highest interest rate. Even if it’s only $15 or $20 extra at a time, every little bit helps. (See Also – 51 Ways to Get Out of Debt)
When you receive a bonus at work or extra money as a gift, use this to pay off your debt. The reward may not feel instantly gratifying, but it will when you’re done making your final payments.
Step 3: Put aside for savings
When allocating your budget, make room for your savings account. People have different methods that work for them. One way is to have a set amount automatically transferred to your savings each pay period. Another is to think about upcoming expenses and put the money into savings right away, so you’re not tempted to spend it.
Placing money in savings can be good for peace of mind when those unexpected expenses pop up. Create separate savings accounts if you want to use your money for something specific like a new car or a fun vacation. By labeling it, you’ll know that the money in that particular account is not to be used until you’ve reached your savings goal.
Step 4: Seek financial help
One of the biggest financial stresses for many Americans is tax time. When April 15th comes and goes and you have filed your taxes, you may think that everything is good to go. Unfortunately, in some cases, there may be complications. If you owe back taxes or more money than you originally estimated, you may not be prepared to pay the total amount owed all at once.
If you’re having problems with taxes, it might be time to seek professional help. A tax company can actually end up saving you money in the long run by helping you settle your debts with the IRS.
Step 5: Welcome the support
The thing about debt is that you are not the only one in it. Talk to your friends and family about what they do to keep track of their finances or read blogs, such as this one, and online forums for tips and tricks to save and make money problems a thing of the past. As much as we focus on our physical health, paying attention to our financial health should also rank near the top of our priorities.
The reason why money problems seem to plague so many people is the feeling of being out of control. It definitely does not feel good to feel under the pressure of debt or costs always exceeding income. There are ways to crawl out from under this and start a positive financial path. Results may seem slow, but every effort is worth it and once you get into a financial groove, it’ll feel less like a chore and more like an everyday habit.
Readers, do you have any financial tips to share? What has made the biggest impact on shaving down your debt?