5 Surefire Ways to Minimize Your Debt Now
All too often, people do things that keep them in deep, long-term debt. Sometimes, without even knowing it, these people are doing things that are hurting them; this might even be a daily occurrence. Watch out for ways in which you veer from these recommendations and discuss them with trusted loved ones to help you overcome them.
1) Assess You “Musts” Versus Your “Wants”
It is important to do a few things to make sure you are spending only the money that you have.
Fist, pay attention to how much income you receive each month. How much exactly is entering your bank account each month after taxes? What money do you have saved already? What things do you have that add to your income (e.g., trusts and stocks)?
Then, focus on your “musts” versus your “wants.” What “must” you spend money on? These things include necessities, such as food, shelter, hygiene, and medical bills. What do you “want” to spend money on?
Differentiate between the two in two separate columns. Place them in order of top priority. Calculate how much each thing will cost you monthly and subtract them from your total monthly income. This will help you determine what money you do have and what money you don’t.
2) Use Your Credit Card Safely
Your credit card could be stolen by someone else and used to your detriment. This often happens when purchasing things online from not-as-reliable companies. When purchasing things online, protect your identity and credit score by using services such as PayPal that do it for you. This is an extra safety precaution for your identity and money. This is where the phrase, “Better safe than sorry!” comes into play. Companies, unfortunately, are not always reliable with your personal and private information, because companies are made up of people; and, people aren’t always trustworthy and ethical.
3) Use Your Credit Card to Build Your Credit Score
If for nothing else, use your credit card to produce a fantastic credit score for yourself. Schedule a reminder each Sunday, or whatever day is your “prepare for the week” day, to pay off your credit card balance. Because you do it so often, your credit score will go through the roof.
4) Don’t Just Pay the Minimum Balance Due on Your Credit Card
There is a minimum balance you have to pay each month on your credit card. “Why not just pay that?” you might ask. Jean Chatzky of CNN Money tells us why. If you have, “$8,000 in card debt at a typical rate of 13.97 percent, and you pay only the minimum 2.2 percent of the balance required each month, it will take you 30 years to retire that debt and cost about $10,000 in interest.” It’s almost needless to say that you should not just pay the minimum balance due. Try to pay off as much as you can each month.
5) Have “Family Meetings” with Your Dependents
A great way to keep your spending in check is to have a meeting every month with your dependents on how the finances are doing in the family/group. Let this be a time to air your concerns, hopes, and feedback for how to spend more wisely.
For example, including your children in these meetings may be beneficial for them long-term. Obviously, there are certain things you might want to keep between your spouse and yourself, as to not scare or confuse the children, but there is nothing wrong with teaching children, for example, that money is not a big, bad, mysterious thing that is impossible to handle. Keeping them in the know will show them how to manage their finances as they grow up, and you will, in turn, improve their financial futures.
For more information on how to handle your personal finances or businesses, follow me on Twitter @MichaelADuch!