There is no worse fear than feeling like you’ve lost total control of your finances. Not hostile takeovers or anything nefarious. No, just through a series of poor decisions and unfortunate events, your credit is less than desirable, and you’re spending more than you make.
When this happens, it can often feel like there is no way out of your current situation. Well, not without filing for bankruptcy. And while it is important to know when bankruptcy is necessary, it doesn’t have to come to that.
Before pushing the panic button and filing for bankruptcy, check out these great tips and tricks for taking control of your finances today!
Cut Down Monthly Expenses
Monthly bills can get out of hand all too easy. That’s not to say every decision you made financially was wrong, or you’re intentionally living above your means.
Often times, people fall into financial trouble because of trial offers. Those 7-day or 30-day free trial subscriptions are a killer when you forget about them. Reviewing your bills for any unnecessary or even forgotten about expenses is always a good idea.
This is also the time to start asking yourself what expenses are “need” versus “want.” Not all the wants have to go; you do need to have some fun in life. But maybe you don’t need all those premium channel subscriptions or even cable at all. Especially with steaming and cord cutting options available.
Reviewing your monthly expenses to see where you can trim some of the fat is the first step to regaining control of your finances. The next step is to consolidate/pay-off your debt.
Once you dealt with your monthly expenses and canceled those unwanted services, it’s time to take a look at your actual debt. This is where you should be looking at the amount left on your credit cards, auto and home loans, as well as any other installment or revolving line of credit.
This is different from your monthly expenses because these have a balance to pay off. Meaning eventually, they will go away. However, having too many installment loans and revolving lines of credit with high balances is a turn off to creditors.
A great way to handle your debt and make it more manageable is to consolidate your debt into one monthly payment. Online loans are a great way for this. Even if you think your credit isn’t good enough, there are online loans for bad credit.
Consolidating your debt basically means taking out a personal loan and using the money to pay off your other debt. The theory being that you will only be left with one monthly payment to one creditor lender.
This can help you when it comes to budgeting in the future, improving your credit score, and making yourself more appealing to creditors and lenders.
Emergency Fund/Savings Account
Presumably, you’re in this position because you don’t have an emergency fund or savings account. Or as is more often the case, neither was big enough for what you needed them for. And that’s ok.
Everyone is always told to have a little cushion for themselves, start savings account, or open an emergency fund. But then, no one says how much you should set aside.
For emergency funds, it’s wise to have at least 3 to 8 months’ worth of your monthly expenses set aside. But, that’s not realistic right now. No matter the amount you start out with, it will help you in any emergency.
The trick is to not stop at the initial investment. Be sure to add the emergency fund deposit to your new budget and to add to the fund continuously. The bigger your cushion, the more it can handle.
If you opt for a personal loan to consolidate debt, you can use any leftover funds to deposit into your emergency fund or savings account. Because of this, there are many online loans for bad credit and good credit alike.
Only You Can Prevent Financial Fires
Emergencies are, by design, impossible to plan for. But that doesn’t mean you can’t set yourself up for success. You may not be able to account for every eventuality, but you can certainly prepare for most.
Having an emergency fund and savings account is the best way to prepare for any emergency. But, even simple things like reviewing your monthly expenses to trim the fat and big things like paying off debt will stave off a real financial forest fire.
Don’t wait until it’s so bad, you need to call in the big guns, take control of your own finances today and keep those financial forest fires at bay. Remember, only you can prevent financial fires.
To read more on topics like this, check out the money control category.