If you have money problems, it’s easy to assume that you could solve all your money problems with more money. Your troubles would vanish overnight if you could just get your hands on earning, inheriting, or winning a large sum of money. Unfortunately, life is a little more complicated than that. A lottery winner could go broke while the frugal couple down the street, earning less than $40,000 a year, could have plenty of financial security. So, the secret to success isn’t necessarily acquiring more money; it could be simpler—spending less than you earn so you can live within your means.
Your money problems could stem from a wide number of reasons. You could be earning less than you need to make ends meet; be an impulse buyer, living for today; or be making poor spending or investing decisions. Sometimes, too, your fiscal distress may not be due to your spending habits, but simply due to the fact that you’ve amassed too much debt. You may have managed your money well until something set you back—perhaps, an unforeseen financial medical emergency or an unexpected job loss forced you to rely on your credit cards to manage your regular bills.
However, regardless of the reason for your financial woes, there are some simple remedies to correct your financial course. So, let’s look at ways to manage your money better, then consider some ways to pay down your debt.
- Ask for professional help
Research available cpa services to find an accounting firm that can help you manage your money, get out of debt, and rebuild your financial life. An accountant can give you an in-depth understanding of your financial situation, teach you ways to improve your credit ratings, show you ways to save money and analyze your investment portfolio. If you’re making a change in your career, either becoming an independent contractor or starting your own business, or if you’re experiencing a change in your marital status, either getting married or divorced, an accountant can help you identify tax breaks or clarify how these major life changes will affect your tax filings. An accountant will always tell you the truth about your finances, and he or she can teach you many things about personal finance.
- Use basic money-management techniques.
Managing your money better can be done in simple, easy steps. For instance, you can track your spending for a month to find out where your money is going. Then, on the basis of this information, you can create a realistic budget and use a calendar to remind you when bills are due. Other things you can do to manage your money better are put money aside to create an emergency fund, use cash-filled envelopes for each spending category to stay within your self-imposed spending limits, and get proactive about learning more about personal finance.
Paying Down Your Debt
- 1. Avoid quick-fix solutions.
Many advertisements that promote services to improve your credit ratings or get out of debt may appear to be an excellent way to resolve your money problems. Debt consolidation, for example, appears to be a good solution. By getting an unsecured loan with a lower interest rate, you can pay off your smaller loans. However, you haven’t really made that much of a difference. You’ve merely rearranged your debt, which is as ineffective as rearranging the deck chairs on the Titanic. In truth, you still owe the same amount of debt and have only reduced how much accumulated interest you were paying on your outstanding balances.
- Create a debt-repayment strategy.
There are three debt-repayment strategies that you could try.
- Pay off the debt with the highest interest rate and then move on to the next one with the second highest interest rate.
- Pay a small amount to each creditor, slowly eliminating all your debts.
- Pay off the smallest bills first, then gradually move on up.
In closing, you can improve your financial situation from another angle: besides spending less and paying down your debts, consider increasing the size of your income pie by earning passive income. Basically, you do the work once, and then get paid for it over and over again. For instance, if you start an eCommerce store, you only need to set up the products in your online store once to get repeat sales. If you decide to sell kitchen gadgets on a platform like Shopify, WooCommerce., Yo! Kart, BigCommerce, or Magento people, you can automate the entire process, from collecting payments to dropshipping products. All you need to do with this income model is to work a few hours a week to source new products, market your store, and perform other routine tasks.