Fixing Your Finances

You’re reading this, presumably, because you want to improve your financial situation.  Whether you’re in debt, just broke, or want to make something even better, you can improve your financial situation.  It probably won’t be easy; it will definitely involve sacrifice, but it’s definitely worth it to gain financial independence.  This article/hub will focus on three main components of fixing your finances:

  1. Getting out of Debt
  2. Decrease Your Spending
  3. Increase Your Earnings

Create a list of your debts.
Create a list of your debts. | Source

1. Getting Out of Debt

If you are in debt, now is a perfect time to resolve to get out of debt. Not next week. Not next paycheck, next month, or next year. NOW. There is no time that will be better, and the longer you wait, the worse your situation will become.

Start by determining your debt load. Gather outstanding bills, credit card statements, loans, mortgages, etc. On a spreadsheet or even just on a sheet of paper, create a list of the name and amount of each debt, interest rates, and the minimum monthly payment.

Once you have your debts clearly listed, it’s time to develop a payment plan.  Chances are, you don’t have the cash on hand to just pay all of it a once, so prioritizing will be a necessity.  Many people find success using Dave Ramsey’s snowball method (his books are terrific sources that will go into far more detail than a hub ever could).

Dave Ramsey Explains the Debt Snowball

The snowball method entails paying the minimum monthly payment on every debt except the one with the lowest balance. On that debt you will make larger payments so that you can pay it off as quickly as possible. Once you have paid off that debt, you repeat the process with your next smallest debt, applying the money you used to pay the previous debt to the monthly payments you’ve already been making. For example, say you have four debts and one thousand dollars to pay your debts each month. Your minimum monthly payments, for the sake of simplicity, are $200 each, leaving you with $200 to apply to the smallest debt, so instead of paying $200 on that debt, you pay $400. Once that debt is paid, you add the $400 you had been paying to the $200 minimum payment you had been paying on the second smallest debt, so now you’re paying $600 per month to wipe out that debt. You’ll repeat the process until all of your debts are wiped out.

Many people alter this plan by choosing a different debt to start with instead of the smallest.  For example, I had two credit card debts that weren’t significantly different (about $2000 on one and $3000 on another), but the interest on the $3000-debt card was 19 percent, and the $2000 card was only 9 percent.  I chose to pay off the higher-interest debt first.  Other people choose a debt for symbolic reasons.  The point is to choose one debt, focus any additional money on it, and once it’s paid off, “snowball” your money onto your next debt.  You will be amazed at how quickly your debt reduces if you use this method!

2. Decrease Your Spending

Most people will find it necessary to spend less in order to find the money to pay their debts and also to avoid adding to or creating more debts.  Even if you have no debt, spending less can help you gain better control over your finances.  This could be very difficult, as excessive spending was probably a lifestyle and a habit that led to your debt problem.  You are going to have to train yourself to stop spending.  Additionally, a significant lifestyle chance is probably not going to happen overnight—that’s going to be too overwhelming and cause most people to become frustrated and quit.  Choose one or two changes at a time; master those, and then try new ones.  It’s kind of like the debt snowball, but instead is a money-saving habit snowball.

Strategies for Spending Less and Saving Money

· Stop using credit cards. Switch to a cash-only system.

· Don’t (or at least significantly decrease) go out to eat. If you do go out, try eating just appetizers or go for lunch, when food is cheaper. You can also try eating a snack before you go so you’ll be less hungry and therefore less inclined to eat (and spend) more.

· Bring your own lunch to work.

· Bring your own snacks to avoid vending machines.

· Avoid single-serving foods and package your own.

· Cook at home. If you’re short on time, try freezer cooking.

· Create a gift budget that you contribute to throughout the year or enact other gift-giving strategies.

· Stop going out for entertainment. Find free events or try renting movies instead of going to a movie. Redbox and Blockbuster Express usually have free codes (search online), so you can get movies for free.

· Use coupons. There are plenty of places to find coupons, and sometimes you can even make money using coupons.

· Don’t buy new clothes. Either make due with what you’ve got or buy used. Garage sales and thrift stores often have very nice pieces for just a fraction of the new price. Sometimes you can even find them new with tags!

· Shop with a list and stick to it. If you buy on impulse, you’re spending more money than you need to spend.

· Shop smart; there are several places that will give you coupons or rebates to shop at their stores and by certain products. You can learn how to do this at Walgreens, CVS, and Menards, among other stores.

· Sell a vehicle to get rid of a payment. Either live with one fewer car or get a cheaper one.

· Move to a cheaper house.

· Get rid of a phone, either landline or cell phone. If you keep your cell phone(s), see if you can cut some of the extra services to save money.

· Cut tv expenses. You can go to a basic package or you can get rid of tv altogether. If you want to cut the cost but still watch tv, you can cheaply watch tv on the internet and/or rent programs from Netflix.

3. Increase Your Earnings

As an alternative saving money (though most likely something you’ll do in addition to saving/cutting costs), you can also earn more money to apply toward paying off debts or toward saving for other goals.  This could range from small steps to major life changes.

Strategies to Earn More Money

· Get a new job that pays more money.

· Get a second or part-time job.

· Do odd/occasional jobs, like babysitting, lawn mowing, etc.

· Sell your stuff. Almost everyone has unwanted and unused items around the house. You can make money on everything from books to small appliances to furniture. Have a garage sale, or try selling on Craigslist (this is often easiest as it’s local), Amazon, Ebay, of

· Take surveys online.

· Try mystery shopping.

· Resell items from thrift stores, garage stores, auctions, etc. These items can be sold online on Craigslist, Amazon, Ebay, and

· If you do have a smart phone, you can use it to make money (this can be used to cover the extra expense you incur by having a smart phone instead of a regular cell phone).

· Sell your plasma or blood (though paying for blood isn’t as common).

· Sell sperm or [much more drastically] eggs.

· Start your own business. This could be something small to generate some extra cash each month, or it could turn into a full-time job.

· Tutor.

· Write articles for sites like Hubpages and eHow. You can also look into freelance writing jobs.

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