Many people struggle with financial issues, with some even choosing to ignore their financial situation altogether because it feels hopeless. But, this is never a winning strategy. Here are some simple ways to manage your money and get out of debt that are doable for anyone.
Downsize Your Life
Get rid of everything you don’t need. Hold a yard sale, cancel your gym memberships. Comb through your bank account statement and cancel services that you know you can live without.
Yes, this means getting rid of things like Netflix and Hulu, but it also means paring down your cell phone bill and perhaps even (gasp) canceling it altogether. If you can’t afford it, you can’t afford it.
And, if you’re in debt and can’t pay it off, you can’t afford luxuries like cell phones and online video entertainment. You might even consider getting rid of your Internet service provider, even for a little bit, just to get some traction on your debts.
Selling off your material possessions is spiritually cleansing too, so you should feel better about not having so much stuff to take care of.
Some people find that they’ve gotten rid of enough stuff that they can downsize their living space – move into a smaller apartment or sell their house and rent.
It can be a huge burden off your shoulders, but it’s also a way to dramatically reduce your monthly ongoing expenses.
Pay Off Debt
Start paying off debt. The faster you do this, the better. While many people advocate paying off the lowest balance first, this actually doesn’t result in the least amount of interest paid. Mathematically, it always makes sense to pay off the highest interest debt first. Always.
But, if you’re looking for a “quick win,” pay off the lowest balance first and use the psychological momentum to keep you going.
Set Up Automatic Savings
Set up an automatic savings. According to Money Looms, there are many ways to save money and many different accounts you can choose from. But, long-term accounts tend to be good for long-term savings needs, like retirement. Think 401(k) plans, IRAs, and other tax-qualified retirement accounts.
By setting up an automatic savings deduction, you’re taking the emotional component out it and treating savings as another “expense.” This gets you mentally prepared to make savings a normal part of your life, which is helpful if your relationship with money is such that you’re used to budgeting expenses only and not savings.
Plan Out Your Finances For The Year
This is perhaps the best way to make a long-term plan. When you plan out your finances for one year in advance, you’re making a commitment to spend only a specific amount of money. If you make a budget, and stick to your spending and savings goals, you’ll end up in a better financial position at the end of the year than you were at the beginning of the year.
Allen Foster is founder and primary author at Money Looms. Through Money Looms and his writing, Allen wishes to pass on simplified money insights that people can put to prudent use, to make the most of money that comes into their lives.