Introduction: What’s the Biggest Financial Worry for Most Families?
The American Dream is a big part of American culture.
It is ingrained in the minds of Americans young and old that if one works hard enough, they’ll be able to attain this dream.
Most people, however, are finding that the dream has become more of a nightmare. The biggest financial worry for most families is not being able to afford basic needs including food, shelter, and healthcare.
We have seen median incomes stay stagnant while housing prices have skyrocketed in many parts of the country. Meanwhile, healthcare costs have been going up for decades with no sign of slowing down.
This doesn’t even mention how college tuition continues to increase year after year, making it impossible for students to afford a quality education without taking on crippling loans that come with high-interest rates and hefty monthly payments after graduation.
How Your Spending Habits Can Lead to Debt
We will go over the many ways in which your spending habits can lead to debt.
Poor budgeting is one of the most common causes of debt.
When people don’t set a budget, they are much more likely to overspend.
Overspending leads to debt because people may not have enough money in their bank account at the time of purchase, so they have to rely on credit cards or lines of credit that charge interest rates.
Overspending also leads to debt because it can cause impulse purchases that people would normally not make if they were being mindful of their budget.
Overspending often leads people into a cycle where they are constantly chasing their goals to stay on budget but are always falling short and overspending again.
A new study by researchers at the University of Utah shows that people who are not in debt are more likely to be poorer.
The researchers found that after controlling for each individual’s overall wealth, lower-income individuals were less likely to have debt than higher-income individuals.
The study also found that lower-income individuals were more likely to live without a credit card, and they tended to owe less when they did have debt.
Consolidation Loans – When You’re Too Deep in Debt
Consolidation loans, also called “refinancing” or “debt consolidation,” are a type of loan offered to people who have multiple smaller debts and need to combine them into one loan with a lower interest rate.
A Consolidation Loan is a debt-management solution that will consolidate your debt into one payment. This can help you save money on interest over time and make it easier to repay the debt since you will only be paying a single monthly bill.
How to Make Budgeting Simple
The budget is not an end in itself. It is a tool to help you make the most of your money, and to help you reach your goals.
A budget should be clear about what it expects you to do, rather than trying to control you. The budget is there for you, not the other way around.
Flexibility is important in a budget.
You might need more or less money at different times of the year, or at different stages of your life.
Your goals might change over time; if they do, then so too should your budgeting plan.
Follow these steps to set a budget that works for you.
Step 1: Track Your Spending
This step is critical in making sure that your budget will work for you. The first thing you need to do is track what you spend money on each day.
Step 2: Create a Budget From Your Spending
Start by breaking down your spending into monthly amounts, then divide them up into categories like food, entertainment, etc.
Step 3: Use Your Resources Effectively when you are budgeting
When you are budgeting, you should always make sure to use your resources effectively. This includes things like selling items on Craigslist, shopping in big box stores, or using free software like Google Docs.
Fast Ways to Get out of Debt and Become Debt-Free
As a result of the financial gloom of the late 2000s, a lot of people have fallen into debt. In fact, according to a recent survey by Experian, 69% of Americans have some form of debt.
Many people are living paycheck to paycheck and can’t even save enough money for retirement.
For those that are able to save, it is often difficult to keep up with the ever-changing interest rates and different payment plans available from creditors overseeing their account.
In order to live comfortably without being bogged down by debt, it is important that those who want to become debt-free take control of their finances as soon as possible.
The following are 7 best ways to get out of debt and become debt-free:
1. Develop a Debt Repayment Plan
A debt repayment plan is a financial plan for paying down debt. It includes a list of debts with the amount owed, interest rates, minimum monthly payments, and the number of payments required before the debt is fully paid.
The goal of developing a debt repayment plan is to get rid of debts as quickly as possible while also ensuring that there’s enough money to cover living expenses every month.
Here are some ways to simplify debt repayment:
1. Make a list of all of your debt and how much you owe on each one. You can also include the interest and loan terms for each loan so you know what they’re charging you for their money.
2. Figure out your monthly income and expenses, and try to find out how much free cash is left at the end of each month after paying all expenses.
3. Write down your monthly payment next to each debt on your list. Use the least expensive option first, but make sure it leaves enough money for other needs, like groceries or gas or childcare or rent.
4. If there are any debts that are costing you less than 10% interest, pay those first if possible because they will cost less.
2. Create a Budget
Creating a budget is essential for any business. A budget is the plan of how the company spends its money. But not all businesses need to create a budget. Some companies can spend freely based on their income and expenses. For these companies, creating a budget is not necessary.
A budget can be created at different levels of detail, depending on the needs of the company. If you are just starting out in business, it might be best to create a simple monthly or quarterly budget that covers your most basic expenses, such as paying your employees and renting an office space.
If you have been in business for some time and know what your expenses are going to be like every month, then you might want to create a more detailed annual or quarterly budget that includes all of your major costs and income sources as well.
Make sure that your budget is reasonable and achievable.
1. Set a manageable monthly budget.
2. Make a list of all the expenses you might incur in the next month (food, clothing, gas, utilities, entertainment), and think about ways to cut back on them or make more money (working extra hours at your job).
3. Calculate how much money you have coming in from each source every month-salary from work, cash from checking/savings accounts, credit card rewards points, etc.-and add them up for the year so far. Subtract what you spend monthly on fixed expenses from what you have coming in to get your total income for that time period. Divide this by 12 to get your monthly income.
3. Reduce Spending on Necessities
If you’re like most Americans, then your income is about the same as that of your expenses. This means you’re in a perpetual state of spending money and not saving any. While it’s not uncommon to see an expense-to-income ratio in the 80% range, it’s better for this number to be closer to 40%.
There are many things you can do to reduce your spending on necessities. For example, if you are looking for clothes, shop at thrift stores. Thrift stores offer clothes for much less than retail stores.
If you are looking for furniture, try garage sales or Craigslist. Garage sales are a great place to find furniture at a fraction of the cost of retail stores and Craigslist is full of people selling used items.
4. Sell Your Assets
Selling your assets is a great way to generate passive income.
You have to find the right buyer for your asset, set a price point, and do some marketing.
When selling any kind of asset you will want to advertise it as much as possible so that people know about it and are interested in buying it.
One way to do this is through social media so you can get in front of the right person with the right amount of influence who might be able to get your asset in front of more people which can lead to more interest or potential buyers.
5. Get Additional Income Streams
With the changing times and advancements in technology, it has become easier to earn additional income. Given the fast-changing trends, it is important to stay ahead of the game and generate extra income sources.
One method to generate additional income that can be helpful for people is by monetizing your skillset. There are many ways that you can monetize your skills like freelancing or selling your own products on Etsy, Clickbank, etc.
6. Cut Up Credit Cards
Credit cards are a blessing to many as they allow the owner to enjoy the benefits of a credit that is available for a certain period. However, there are also some downsides to it. One of them would be the risks involved in keeping a card without knowing how to cut it up.
-Leave the plastic pieces on the counter and run away as fast as you can
-Locate hardware stores or where you can buy scissors nearby
-Cut off the magnetic strip at an angle with scissors
-Use any remaining strips of plastic to cover your tracks
7. Increase Your Income
With the growing demand for freelance work, it is important for freelancers to find their own niches. As freelancers are not limited to a particular industry, they should explore the other fields that are in demand.
Freelance Writing is an essential skill that can be put to use in many industries. If you’re looking for ways to generate income on your own schedule, freelancing could be the perfect solution for you!
How do You Know if You’re Ready to Pay Off Your Loans?
You might know that it’s time to pay off your loans if you’re consistently not making progress on your loans and start getting behind on payments.
However, you might not be sure if you’re really ready to pay off your loans or if there is something else going on in your life.
There are a few things that can indicate that you need to take a step back from paying off your loans and focus on other life priorities. These include:
- You suddenly find yourself in a wealth of free time because of major life changes such as career advancement or buying a house.
- Your debt is the sole focus of the majority of your thoughts and energy.
- You feel like you don’t have enough control over your emotions around finances because they’ve become a priority over everything else in your life.
Ali Ounassi, Founder Of BestProductivityTips.com