Good Advice For A Bright Financial Future

If you want to get out of debt, you need to develop some good financial habits. Here are some tips to help you on your journey. By following these tips, you can take control of your money and achieve your financial freedom. 

Make a budget and stick to it. A budget is a plan for how you will spend your money each month. It helps you keep track of your income and expenses, and to figure out where you can make changes.  Set a budget and stick to it. Most of my clients have never tried to track how much money is coming in, and how much needs to be paid out every month. Review your budget regularly and adjust it as needed. Doing this will help you determine how you can lower some expenses by reassessing your need for each expense. Most of my clients have decided to eliminate cable tv or satellite, for example, to help make ends meet. These days there are multiple free streaming options that can be more affordable options.   

Don’t co-sign for anybody else, not even for a spouse. Most people are caring and want to help out a friend or a relative or might co-sign for them to make an expensive purchase such as a car. If someone is asking you to cosign for them, it is because they made poor decisions in the past and have caused their own financial woes. Don’t believe that they will suddenly make better choices in the future.  The old adage: Never mix business with pleasure makes a lot of sense. Many people have lost friends or stopped speaking to relatives because of this very issue. 

Credit cards. If you pay only the minimum on your debts, it doesn't reduce your debt much, and it can take a long time to pay off your balance. By paying more than the minimum, you can save money on interest. The best way to handle credit cards is to become a “transactor” rather than a “revolver.” A transactor uses credit cards every month, and pays them off every month.  This way, you can build credit without building debt. If you are a revolver you would roll over debt to the next month which will cost you money and make more money for the bank. 

Build an emergency fund. An emergency fund is a savings account that you use only for unexpected expenses, such as car repairs, medical bills, or job loss. Having an emergency fund can help you avoid using credit cards or getting new loans when you face a financial crisis.

Avoid signature loans and payday loans. The interest rates on signature loans and payday loans are astronomical. From my experience, it you already have these kinds of debts, your financial future is already circling the drain. 

Find out more information from reliable sources.  You can contact a nonprofit credit counseling agency, a debt management program, or get good information from your local library. And depending on your needs and goals, a call to a bankruptcy attorney would be a good choice. An attorney would give you advice on alternative ways to deal with your debt issues. Look into a credit builder loan.  (See my section on credit builder loans.)