Want to improve your personal finances quickly and effectively? Who doesn't? The good news is that just about anyone can begin right now taking the steps necessary to make their money situation a bit less stressful. How? By doing four things that smart folks have been using to their advantage for decades. Here's how to get started and take those important first steps.
Find Out Where You Stand
Self-knowledge will not pay the bills, but without it, you will never be able to get started. Take an afternoon or evening to list all your debts and earned sources of income as they are currently. Find out where the biggest gaps are, which credit cards have the highest interest rates, how savings or home equity might be able to help, and what total outstanding balances are on everything you own to anyone.
Home Equity Loans
If you have equity in your home, you are in luck. This financial resource is the most cost-efficient, safest, and fast solution for most people who owe on high-interest credit cards and vehicle loans. Taking out a home equity loan makes sense for multiple reasons, so study your mortgage terms and conditions carefully and calculate how much built-up equity you're sitting on. An online guide is a great resource for learning the basics about obtaining a home equity loan, understanding tax treatment, seeing interest rate options, and much more. Taking a second mortgage on a home can be the best personal finance move you ever make.
Ditch Some or All of the Plastic
Line up your credit cards according to their interest rates. Consider saying goodbye to all or most of them. The one to keep is the one with the lowest cost of use, or lowest interest rate. Consumer plastic is the single biggest drain on any family's or single person's budget. That doesn't mean they're inherently evil, just that they tend to be widely misused. It can be hard to break the credit habit if you're deep in the hole. If things seem especially dire, think about visiting a free credit counselor who can show you specific, targeted ways to dig out of the plastic hole that so many folks seem to fall into.
Re-Calculate the Monthly Budget
This is where the rubber meets the road, so to speak. Your monthly budget is the detailed anatomical chart of your financial life. That doesn't mean it's carved in stone. Make an effort to tighten your budget by eliminating excess spending and possibly increasing income. The most common areas of over-spending for average working people are eating out, fast-food, and entertainment.
One way to chop these expenses painlessly is to limit fast-food meals to one per week, keep restaurant visits to one every other week, and cut your entertainment (bars, theaters, etc.) costs in half. The first month is tough, but you'll quickly see the improvement in your finances. On the income side of the ledger, think about ways you could earn more money without taking on a part-time job. In the digital age, just about anyone can find a five-hour or 10-hour per week gig doing online product reviews, freelance content writing, or working as a virtual assistant.