Feeling overwhelmed by debt and poor finances can affect every aspect of your life. No matter how great your relationship is, how happy your offspring make you, and how good a job you have, being in the red every month can take its toll. Having limited funds impacts on the sort of house you can rent, it may prevent you from buying a house, your credit rating will be low, you won’t have the necessary means to travel, you might not be able to eat out, and you may feel stuck. Getting your finances sorted out should be your number one priority.
However, sorting out your finances will be easier said than done. Because you are all too aware that clearing your debt will take years, it’s much easier to just bury your head in the sand and pretend the financial issue isn’t there. You might put bills straight in the bin without even opening them and you may perpetuate your financial difficulties by applying for more and more credit. This needs to stop and you need to bite the bullet and commit to the long road to financial freedom. Take a look at how you can get a grip on your finances in five simple steps.
1. Improve Your Credit Rating
Forget anything else for the moment, and consider your credit score. Head online to one of the many free credit report agencies and input your details to gain access to a free report. While basic, this will give you a credit rating which will give you a clear idea of the sorts of areas that you need to improve. If you have court judgements or you have missed a payment on your credit card, it will show up here.
These credit reporting agencies have their use, because they can give impartial advice, telling you how to enhance your credit rating. For example, if you aren’t registered with your local authority, you need to tell them that you are living at your address. This is no effort on your part, and may bump your credit score up a few marks. It will also show you where the black marks are against your name. If anything flags up that you want to question, get in touch with a company like McCarthy Law Debt Settlement to represent you. It’s not fair if you are down as having been in your overdraft for the past year, if you have been disciplined and you’ve never even gone near it. This needs rectifying quickly, so you have a little more financial freedom.
2. Start To Repay Your Debt
It doesn’t matter whether you were frivolous when you were young, whether you have taken out way too many credit cards, or whether you use store cards to buy clothes, you need to start repaying what you owe. Being in a constant state of flux and having to owe thousands of dollars isn’t good for your mental health and physical well being. Being in debt prevents you from enjoying all aspects of your life as there is always the financial worry at the back of your head. It impacts everything you do.
Committing to a debt repayment plan is brave but necessary. Take a look at your bills and expenditure and start planning. Set yourself a personal budget to stick to. This will take three of four months of honing, as you need to work out what you can save money on. Is that almond croissant and cappuccino on your way to work every Friday really necessary? Once you have a budget stick to it. This should help you to spend less than what you earn.
Repay your debts slowly at first but make sure you go above and beyond the minimum repayment. By paying back more each month you are eating into the capital and will take less time for you to pay off the debt. If lots of small repayments are taking place throughout the month, this can get confusing. Instead, consolidate your debt into one manageable monthly repayment. This means that you will only have one date to remember when a payment comes out of your account. Knowing how long it will take to pay off your debt means that your morale will be boosted when you see the repayment amount coming down each month. Months soon turn into years, and knowing that there is an end date for your debt repayments can be liberating.
3. Live Well
Just because you are in debt doesn’t mean that you have to live like a pauper. You can still enjoy life, you just might have to tweak the sorts of things that you do. If you ban going to the movies or eating out, you will simply grow resentful and slip back into debt. Instead, ration yourself. This can make the times that you do go out and socialize all the more enjoyable. Head to the cinema on a weekday instead of at the peak weekend. Go out for dinner when you spot a two for one offer, and stick to the chain restaurants rather than the expensive Michelin starred eateries.
Be open and honest with your pals about your financial difficulties. The chances are that they will want to support you and they will be proud of you facing up to your responsibilities. They may change up their social calendars so that you spend more time around one another’s pads with cheap and simple takeaways rather than costly nights out on the town. Be appreciative and thankful for their support.
The concept of saving while you are paying off debt may seem counterintuitive. However, as you begin to see your debt balance fall, you may be keen to get a small nest egg ready for when you can put down a deposit on a house. You don’t have to wait until you are wholly debt free. Any spare few dollars that you have should be put into a savings account. While the money may accrue slowly at first, your mojo will be lit when you see your tens of dollars in savings morph into hundreds and then into thousands. Ask for an account without a checking book or card. This means you won’t ever be tempted to release your savings for some frivolous spending.
Your goal should be some sort of asset. A house or any form of property is excellent as it allows you to build equity and gives you a stable home to call your own. Renting is fine and can give you flexibility, but the chances are that you will want to put down roots eventually and you won’t want to line the pockets of a landlord for the rest of your life.
If you are saving for a deposit on a home, you need to be frugal and limit your spending elsewhere. This is the same for people in lots of debt as well as people with none. A mortgage provider needs to see that you are a responsible borrower. Ensure that you don’t venture into your overdraft and maintain regular repayments to your store cards and loans. Remember, you don’t have to have no debt whatsoever to buy a house. It just needs to be managed well.
With less debt and by not going into your overdraft, you will have access to more preferential lending rates. This is perfect as you want to keep borrowing costs down. Opt for a fixed rate mortgage for safety and security and look forward to putting a deposit down on your very first humble abode.
5. Learn To Say No
Practically, shifting your debt and revolutionizing your finances is the easy part. Learning to foster a healthier relationship with money and credit is harder. Some people love the thrill that buying a new outfit gives them, whether they can afford it or not. If you have other issues going on that are relieved by spending money even for a short time, you need to seek professional help. Debt management help lines are great anonymous sources of advice or you might prefer to talk through your issues with a therapist. Friends and family are a great support but they can lack objectivity.
Once you have talked through your problems, you will emerge with more respect for money and you won’t need to use it as a crutch to help your emotional issues. Improving your mental health can have a lifelong impact on the lifestyle you can afford. For some people, this means talking things through with a therapist for the rest of their lives. Being addicted to spending can be overcome if you know where to get help.
Getting a grip on your finances is no easy task, especially if you have slipped into bad habits, or your ability to manage your debt seems like to steep a mountain to climb. However, once you have committed and secured the support network around you to succeed, you can achieve a debt free existence. Follow this guide and get a grip on your finances in five simple steps.