Often, when getting advice on repairing your finances, saving money and cutting your debt, one of the steps provided is to contact a financial advisor or other professional. The truth is that spending money on yet another service isn’t exactly a good step toward saving money, and with a little perseverance, you can actually do everything that they can.
The first step to debt reduction is to gather all of your bills in one place and determine how much you owe to each creditor. Creating a notebook or a spreadsheet with this information will make it much easier to see where you are at and look at the big picture.
You may have a few smaller bills lying around. Take care of those quickly before they escalate into bigger bills thanks to late fees. Check them off your spreadsheet.
Organize the rest of your bills from smallest to largest. If you can, continue to pay the minimum balance on the rest while you put most of your resources into paying them off in order, starting from the smallest. The reason for starting with the smallest is that you can pay the smaller bills off quickly, which will feel rewarding and will encourage you to keep up with your debt reduction plan. As you pay off each bill, roll over the amount you were paying toward the next bill, so that your payments steadily increase, and debt reduction happens even faster.
Investing and Saving
Once you’ve paid off your bills, it’s time to put that money to work for you. Don’t just put your money into the savings account that is attached to your checking. Chances are good that the interest rate on that account is low. Look around for a high-interest savings account or a high yield money market account. You can find tools online that will show you an up-to-date listing of the banks or institutions that are offering the best interest rates.
If your employer offers a 401k or other retirement plan, invest in it, especially if your employer offers a matching program. When your employer matches your contributions, that’s essentially free money. Always invest at least as much as your employer is willing to match to grow your retirement savings quickly. If you are self-employed, start your own retirement account. Your bank or credit union can get you started, and you can set up automatic deposits straight from your checking account so that you don’t forget.
Taking control of your finances doesn’t have to be expensive and doesn’t require a degree in accounting or financial management. Try these tips and keep making the effort, and you will see the rewards.
Post by Amanda