Personal finance articles and websites contain plenty of helpful pieces of advice to take control of a difficult financial situation and learn how to improve it. Unfortunately, many of the methods are either excessively complex or do not pertain to an individual’s or family’s real-life circumstances. These people want answers that work for them. Luckily, these ridiculously simple ways to improve your finances are both accessible AND effective for any income level or debt situation.
Understand Your Current Financial Situation –
The first ridiculously simple way to improve your finances is all about identifying what the situation is, to begin with. If the problems are not known, no one can fix them. This step involves writing down absolutely everything spent and earned for a few months. Super easy, right?
The hardest part about this is remembering to do it, but Smartphone Apps and daily alerts or notifications can be friendly reminders that will help. Also, make a list of every debt, to whom it is owed, the total amount owed, the minimum monthly payment, and the interest rate. Start with either the largest amount of debt first or the debt with the highest APR. Depending on the route you want to take (Debt Snowball Method or Debt Avalanche Method) you’ll be tackling one of those two first. Easy to do, but the truth might not be too easy to face. Still, this process matters if the end goal is to be completely debt-free.
Create A Household Budget –
After writing these lists of money coming in, money going out, and all current debt, the creation of a household budget should be extremely simple. Categorize each expense into sections such as food and grocery, vehicle expenses including gas, maintenance, and insurance, utilities like heating and electric, and things like child care, medical expenses, clothing allowances, and entertainment. You can use our free Budget Builder online tool to walk you through step-by-step to create a budget within a few minutes.
To improve finances, take money away from the average amount spent on one or more categories every month. So, if the usual grocery expense is $900 per month for a family of four, find ways to reduce it to $800 by shopping sales, changing brands, or using coupons. Meal planning is also an easy way to save money each month. It is simple, and that extra money will really add up over time.
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Also, add things to the budget if they were not already part of it. These important things that will improve any financial status include money set aside for a retirement fund, emergency savings account, and other investments that will help you build a stable and secure financial future. An emergency account with a bare minimum of three to six months’ worth of expenses is a total must-have. Since sometimes new cars are needed and yearly vacations are wanted, budgeting in advance for things like that improves the money picture for the long term. You don’t want to go further in debt with a vacation to Hawaii.
Take Steps To Reduce Debt –
Set aside the list of expenses and the new household budget and take a deep breath. It is time to tackle the list of debts hanging over your head. The ridiculously simple way to make things better and get out of debt as fast as possible can be summed up in one simple sentence: payback MORE than necessary as soon as possible.
It’s also a smart idea to seek free financial guidance help in the form of a nonprofit credit counseling agency. Their credit counseling service is free and they can show you different debt relief options that might work best for you. A Debt Management Program is just one of those options. You can learn more about that here: https://www.advantageccs.org/how-does-a-debt-management-program-work
Big debts like mortgages and car payments should stick around longer than high-interest debts like credit cards or retail store cards. Payback the highest interest debt first, then snowball the payments into those with lower interest until all those debts are gone. This method is tried and true, and it will help you save the most amount of money possible by eliminating the high-interest debt first. It takes some of the decision-making out of the process because you are following a set plan and you won’t have to question whether or not this is the best move. Also, pay back more than necessary. Even adding ten dollars to each payment helps in the long run.
When it comes to improving your finances, the process does not have to be complicated or frustrating. Know how much money comes in, how much goes out and where, and then make adjustments to have more left over at the end of every month. With that leftover money, start an emergency fund, and then add the extra to reduce debt with a debt repayment plan that works for you and your lifestyle. It’s all ridiculously simple and ridiculously effective. We promise!
If you ever need help or have any questions, feel free to give us a call toll-free at 1-866-699-2227 or visit us online at www.advantageccs.org to speak with one of our certified credit counselors for free. We’ve been helping people get out of debt since 1968, and we can help you too! We’re proud members of The National Foundation for Credit Counseling (NFCC) and we’re accredited by The Council on Accreditation (COA). WE GET DEBT!