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Credit Wise
How to Make Financial Dreams a Reality
It’s the
beginning of 2008 and you have a whole year of possibilities stretched out in
front of you. Hopefully by now, you’ve already made and broken any resolutions
that weren’t going to stick. It’s a great time to get serious about any
changes that you want to make in your life. Take a step back and look honestly
at your financial position. Are you happy with where you are? Do you have debt
that keeps you up at night? Are you going through life with your fingers
crossed, just praying that nothing will go wrong since you have no savings? Now
is the time to set some realistic goals and develop a plan to get you where you
want to go. More...
You may not even know what an ideal
financial situation looks like. Even though there are many variations, most
people who are in control of their finances have little or no credit card debt,
they have money in an emergency savings fund and put in more each month, they
pay cash for most items, they save up and pay cash for major purchases (except
maybe cars and houses), they don’t worry about how they are going to pay their
bills, they pay everything on-time, they save for retirement, and they invest
their money. When they do finance items, they get the best interest rates and
don’t have to worry about being denied. They weigh major purchases carefully
and don’t typically make impulse purchases. They don’t buy things just to
keep up with the neighbors because they don’t spend beyond what their income
allows. While that may seem like an unattainable
dream, it isn’t as far away as you might think. Very few financially secure
people became that way because they won the lottery or had that money handed to
them. Many have even faced the same concerns you are facing right now. The
difference is that one day, they got serious about changing their lives and they
did it. Are you ready to do it, too? Here are some of the most common financial
complaints plaguing American households along with advice on how to get out of
that financial rut and make 2008 great! “I’m
spinning my wheels” Do you feel like no matter how hard you work,
you are constantly worried about money and can’t seem to make progress? Try
doing a complete financial analysis to see if your problem is not having enough
income, spending too much or both. If you don’t know where to start, many
websites have programs that can help. Many non-profit credit counseling agencies
offer free or low cost counseling to help you get a glimpse of your complete
financial picture. To find one near you, contact the National Foundation for
Credit Counseling at www.debtadvice.org.
If you’d rather try it alone, figure exactly what your take home pay is. Then,
review living expenses and estimate your spending. Then, add up any debts that
you have. Take living expenses plus debt and subtract that from your income. Are
you upside down? Once you know where your money is going, you’ll have a much
better idea of how to plug the leaks and where to cut. “I’m
tired of owing credit card debt” The exhilaration that can
accompany buying things you want with credit cards quickly fades. Then, you’re
left worrying about how you will pay it back. Maybe you didn’t buy anything
but had to use your credit cards to pay for medical bills or other emergencies.
If your interest rates are high, even if you make the minimum payment, you still
may only pay a few dollars on the principal balance. Most of your payment just
pays the interest. It can seem like you’re on a human size hamster wheel and
there is nothing you can do to change it. The truth is that you can do
everything to change it. First, stop charging. Just leave your credit cards at
home. Next, see if you can get your interest rates as low as possible. Call your
credit card company and just ask them to lower your rates. See my article on how
to negotiate lower interest rates. A non-profit credit counselor may also be
able to help you get your rates reduced. Then, pay as much as you can every
month. It will seem like a slow process at first but before you know it, one by
one, that cards will be paid off. “I have
no savings safety net” Many people live paycheck to paycheck with
little or no savings. If the air conditioner goes out or they get a flat tire,
they end up charging or getting a loan to pay for repairs. It’s risky to work
without a net. Start saving money today. I know that you are going to say that
you don’t have any money to save. Just start small. Practice putting something
in savings and leaving it there. Even if it’s $10 per month (most of us can
find easily $10 a month), just start saving. Increase the amount when you can.
Before you know it, something will go wrong and you can just pull the money out
of savings to pay for it. ‘I
can’t seem to pay things on-time” For some, they may have the
money to pay their bills, they just can’t seem to get organized. In just a few
hours, you can organize your bill paying and it will be easy to stick with it.
First, take a calendar and write down when you get paid. Then, take all of your
bills and write down when they are due. Do you have more bills coming out of one
check or are they evenly spaced? If necessary, ask your creditors to move your
due dates if they all fall at the same time. Then, go online to your bank and
set up every creditor on bill pay. Most banks offer this service for free. You
don’t even have to pay for stamps or checks! Then, every time you get paid, go
home and pay every bill that will be due until you get paid again. This will
ensure that everything will be paid on-time or early. This will also let you
know exactly how much you have to last you to the next payday. Once you get
ahead of the game instead of constantly playing catch-up, it will relieve a lot
of stress. You also won’t have to worry about those costly late fees. If you
don’t want to use the online bill paying option, organize your bills by payday
and mail all of the payments on your payday. There is no reason to wait until
the due date. “I need
to save more for retirement” You’ve probably seen that funny
retirement commercial where one moment Fabio is steering the gondola and the
next, he’s old and gray. Life doesn’t happen that fast but its close. The
commercial makes a good point. We put off saving for retirement and then, we
find ourselves needing to retire but unable to afford it. The truth is that the
earlier you start, the more you will have when you retire due to the magic of
compound interest. If your employer offers a 401k or 403b retirement plan, you
are literally throwing money away but not utilizing it. Many employers will
match what you put in, up to a certain percentage. It’s like giving yourself
an instant raise. What’s even cooler is that the money you put in is pre-tax.
That means that you won’t see a dollar for dollar reduction in your take home
pay. Chances are, you won’t even notice that the money is missing from your
check. Sometimes it can seem that you will never
achieve your dreams. It seems that there is too much work to be done to make
them a reality. One of my favorite quotes is “The journey of a thousand miles
begins with one step” by Lao Tzu. Your financial journey begins the same way.
Just start today and stay on track. Before you know it, you will look back and
see how far you’ve come. * * *
Copyright © 2008 by Jennifer Wallis. All rights reserved. Want more money-saving tips? Get a FREE Subscription to our monthly newsletter!
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