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Helpful Tips to Staying Afloat in a Financial Crisis
For many people, financial worries are a regular source of stress, which is reasonable considering the uncertainties of today’s economy. When you’re troubled about your debts and you’re struggling to figure out how to solve your financial crisis, you may start to wonder whether you missed something on the topic in school. Fortunately, you don’t need an ivy-league degree to solve your financial problems. Here are a few sure strategies you can implement to help you solve your money and debt problems.
Try to Avoid Credit and Debit Cards as Much as Possible
Think about the last time when you had to use cash to pay for some purchases. Credit and debit cards are responsible for making people develop bad habits when it comes to spending. These cards are also where the fine line between what you can actually afford to spend on and what you can actually afford to pay for becomes blurry. With cash, it is easy to tell whether you can afford to make a payment for an item or not. In order to free yourself from this financial slavery, try to avoid using your cards for at least two weeks and stick to using cash when you want to pay for something.
Keep Tabs on Your Spending Habits
Once you have learned the valuable lesson about using cash only, you should now consider your spending habits. First, you’ll realize that parting with cash is a lot harder than parting with plastic. It helps you to stick to only buying the things you need. You’ll also be able to tell if you have enough money left for other purchases as well as for saving.
Several studies have established that people tend to spend as much as 15% more on each purchase when using credit and debit cards instead of cash. When you spend more on every purchase, your debt keeps growing and accumulates over time. If you want a debt solution that will last a lifetime, make sure you are always aware of how you are spending your money.
Only Get into Debt when it is Absolutely Necessary
Many people often get into massive debt because they take up debt through loans and credit cards to finance luxury spending. This is not a sound financial move if you want to stay afloat in times of financial crisis. Only take up debt when it is absolutely necessary, like in the case of an emergency. Try to look for debt options that you can easily and quickly pay off. You can get good deal on the best payday loans once a month to cover for small emergencies that tend to come up when you have exhausted your monthly income or salary, like paying for car repairs and utility bills.
Create a Budget or a Spending Plan to Prevent and Solve Money Problems
Creating a monthly budget for your spending is a smart move when it comes to proper financial planning, yet it is the most ignored solution to many people’s financial problems. If you have a budget, it helps to make life easier since you have something to guide your spending decisions. Ironically, creating a budget is one of the things you’ll never be taught in a class. If you have never created a personal spending plan or budget, this is the time to start. Start by creating a budget that is based on real figures such as your salary, utilities, and other household expenses. This will help you identify any expenses that you need to cut off and decide how much you are willing and able to save from your income.
Develop a Plan to Clear Off Your Debt
Everyone has some debt, and while you may feel like that is not a big deal, you ought to reconsider your position on this issue. If you have debts that have gradually accumulated over the years, you must consider realistic debt solutions that will suit your lifestyle and not quick fixes that are not sustainable. Interest rates can start increasing and as the years go by your income will probably reduce when you retire. When one of these two things happens and you have been relying on debt to make ends meet, you may find yourself in a very tough position.
Set Realistic Commitments Realistic
The best approach to debt is dealing with it sooner rather than later. This will leave you with more options. Start creating a plan to clear off your debts early and remember to maintain a reasonable standard of living. You will only be able to clear off your debts over time if your plan is realistic. Start by determining what you can realistically achieve and then commit to adhering to each commitment every month. Set targets for each month and stick to those targets. For instance, you can decide to spend less each month and commit the balance toward gradually repaying your debt. This will help to reduce your debt balance by a certain amount each month. Just like an intense exercise regimen or a crush diet can lead to burnout, you do not want to set overambitious financial targets that you may ditch in a couple of months.
Make the Most Out of Your Income
There’s a common belief among many people that you simply don’t earn enough to put towards your financial goals. This mentality is your worst enemy if you are trying to solve your financial problems and achieve financial freedom. Try to concentrate on making the most out of the income you earn by spending wisely. Use all means to minimize expenses and increase your savings. You might want to use a calculator to see how much time it will take you to hit a certain financial target, like a savings goal or a debt repayment goal.
In a nutshell, the financial benefits of addressing your financial problems - sticking to cash instead of credit and debit cards, keeping tabs on your spending habits, and borrowing in cases of emergencies only – will not only improve your bottom line, but also your overall mood. Additionally, spend your income wisely, and clear your debts early to be in a financially sound position.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes.