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Tackling Money Troubles: A Step by Step Miniguide to Ease Your Mind

Dealing with financial problems and challenges is something everyone faces at some point in their lives. For some, the trouble may only be temporary. However, money problems for many people can turn into long-term challenges that can feel as though there’s no end in sight.

When the pressure of a mountain of bills and a never-ending stream of debt repayments becomes too much, it’s common for many people to start looking for ways to ease their situation. They might start reading through debt-reduction tips that advise them to start living like a pauper or taking drastic measures in an effort to pay down some of the outstanding balances.

In reality, taking extreme financial measures or creating unrealistic budgets only adds to stress levels and increases the pressure to find new solutions. The only real way to solve money troubles is to find the source of the problem first.  Here are some tips for tackling your financial problems.

Identify the Source of the Problem

At the root of all money troubles is the source of the problem. Some people may recognize that they spend more than they earn, buying things they don’t really need or living an extravagant lifestyle that exceeds their incomes. Some may simply have borrowed more money than they realized, resulting in monthly repayments that eat into their available income and leave nothing behind to live on.

For others, the problem may have begun from an unexpected illness or accident that resulted in increased medical expenses and a temporary loss of income. Of course, big financial upheavals, such as divorce or losing a job are also common sources of money problems.

Before you can create a realistic plan of action to resolve your financial woes, it’s important to first identify the cause of the problem.

Stop Using Credit Cards

It’s surprising how many people lament their financial problems, but they continue using their credit cards to pay for the things they want. If you’re serious about getting out of your financial predicament, stop using your credit cards immediately.

Use your income to pay for your living expenses and bills. If your income doesn’t stretch far enough to cover your expenses, it’s a clear sign that you’re living beyond your means. It’s time to face facts and re-work your budget.

Catch Up Past Due Debts

If your financial problems have resulted in some of your debts going unpaid, it’s likely you could be paying late fees or penalty interest charges on those amounts. Aside from costing you more than you should be paying each month, you also risk damaging your credit score.

Work on ways to catch up any past due debts you have as quickly as possible and get them back under your control. Consider holding a yard sale or selling some unwanted items on eBay.

If you don’t have any items you want to sell, think about whether taking out a short-term loan might help you get back in front. Lenders such as King of Kash at https://kingofkash.com/personal-loans/ offer small, short-term loans that let you clear up your financial problems now and then repay the amount you borrowed over a period of time.

Reduce Spending

Most people cringe when they’re told to reduce spending. After all, if they’re facing money troubles, chances are they’ve already slashed their spending to rock bottom already. They think about cutting back on coffee or brown-bagging lunches, or any number of trivial little things that might save a dollar or two, and they tend to give up hope at that point.

What you might be overlooking are some of your other expenses where you might be paying more than you should. For example, take a careful look at how much interest you’re charged on your outstanding credit card debts. It’s common for some credit card companies to charge 19% or more on your outstanding balances.

Shop around for a balance transfer offer with a really low-interest rate or refinance the debt to a consolidation loan. You could reduce your monthly repayments dramatically and free up your income to put towards your debt reduction goals.

Shop Around

Take a careful look at how much you pay for your phone and internet services and compare options with other providers to see if you can get a better deal. Likewise, take a careful look at how much you pay on insurance premiums each month and see if shopping around uncovers better policies at more competitive prices. Shopping around for better prices on things you already use can be an ideal way to reduce your monthly expenditure.

Accelerate Your Savings Goals

When you’ve worked out how to cut your current spending levels and reduce your monthly repayments, it’s time to look at how much extra cash you have left over at the end of each month.

Slashing your debt repayments and paying less for other services should mean you’ve generated a surplus in your income. Put those additional funds towards paying off your remaining debts faster.  If you receive a tax refund or work bonus or other windfall, put that money into reducing your debts too.

Once your debts are repaid and under control, it’s time to start on a savings plan. Build an emergency fund so you won’t have to rely on credit cards in the future. Start adding to your retirement savings.

The key to regaining control of your financial problem is to take small, positive steps that help you reach your goals.

 

 

Tom Hanson writes articles to help people get their finances under control. He has worked as a personal finance consultant for several years and enjoys helping people to turn their finances around.

Comments

  1. Very true! For us, increasing income, fixing our old habits, and drastically cutting spending were crucial to getting on the straight and narrow. I think conquering old habits (eating at restaurants every day, buying entertainment, impulse shopping) is the most difficult part.

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