Personal finance is the bane of everyone’s existence. Let’s face it, there are not a lot of people who will put their hand up and say that this is their favorite subject. However, without having a little bit of knowledge about it, your life is going to get financially complicated very fast. So here are a few things that you need to know.
If you have lost a prior home to foreclosure, this does not mean that you are out of home owning altogether. You should be able to get a government-backed mortgage through Fannie Mae, Freddie Mac and the FHA, in as little as three years after your previous home has foreclosed.
Budget, budget, budget – yes, whatever you do, make a budget. The only way to know what is coming in and what is going out is with a budget and a ledger. Whether it’s with pen and paper or a computer program, sit down and get it done. Your finances will thank you for it.
Avoid buying new gadgets as soon as they come out. As we have all seen recently with some of the hottest new products, the price tends to come down within the first 6 months of release. Don’t jump on the train to buy your new toy at release, and you’ll save yourself a bundle.
When it comes to maintaining your financial health, one of the most important things you can do for yourself is establish an emergency fund. Having an emergency fund will help you avoid sliding into debt in the event you or your spouse loses your job, needs medical care or has to face an unexpected crisis. Setting up an emergency fund is not hard to do, but requires some discipline. Figure out what your monthly expenses are and set a goal to save 6-8 months of funds in an account you can easily access if needed. Plan to save a full 12 months of funds if you are self-employed.
One of the best ways to get the best bang for your buck is to reuse items that are not perishable. When you bring your lunch to work, use the same container over and over. This will reduce the amount of brown bags that you have to buy, while still keeping your food secured and fresh.
Try to stick to your budget as best you can. If your expenses are increasing considerably, take a moment to reconsider your renovations. You may have hired the wrong contractor or may be straying away from your original idea. It is easy to get carried away when making changes, but stay focused.
If at all possible, pay off your credit card balances in full. Only put as much as you can pay off on the credit card each month. It will show that you are a responsible borrower and it will increase your credit rating as well as make it easier to take out lines of credit in the future.
Do not pick products just because they are expensive. It’s easy to get fooled into the idea that the more expensive the product the higher your commissions will be. The premise is accurate but in reality you can make a lot more from a more mid-range product due to the volume of sales you can receive.
By keeping close tabs on your cash flow, you can make sure that your financial situation is well under control. Track your income and your expenditures, and assess the performance of your property as an investment at the end of every month. Ensure you have a budget written down to look to as a guide.
Make sure you keep track of what you are spending. This will allow you to see exactly what you are spending your money on, and you will be able to see places where you can easily save some money. For example, instead of buying a $5.00 coffee, you can just make coffee and buy a travel mug.
An area of personal finance that sometimes gets overlooked is insurance. If you were to lose your job or become ill, even a substantial savings account could be depleted pretty quickly. Many mortgages, loans and credit cards offer insurance that will pay your payments during such events. Disability insurance is another way to ensure a source of income if you were to get hurt. It is usually not as much as your regular salary, but combined with your savings, it can cushion the blow a bit.
The best way to save money at a grocery store is by using coupons. Between in-store values and coupons, you could drastically reduce your grocery bills to ease finances. And nowadays coupons are not just available in newspapers, they are also available on many websites online. You can just print them out from your computer!
Most financial planners agree that the most important step you can take to strengthen your finances, is to pay down your credit card debt. There is a simple and logical reason for this. If the average interest on a consumer’s credit card debt is fifteen percent, he would need to find an investment paying a guaranteed rate equal to that, in order to justify not paying that credit card off.
To discourage yourself from spending recklessly, start tracking all of your expenditures. This works in the same way as a food diary does for dieters. By making you more conscious of what your small slips are costing you in the long run, this strategy helps you to stop money problems at their source.
Ask credit card companies to lower your rates. If you’ve been paying your bills on time, they should have no problem with this request. Ask politely and calmly, and don’t threaten them or harass the person you are speaking with. If necessary, talk to a manager. This way, you will save money on your credit card bills.
So there you have it. Not such a scary subject now, is it? Armed with the advice presented in this article, you now have the knowledge you need to tackle your finances with a little more confidence than before. Who knows, over time you may even look forward to long term financial planning!