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10 Tips for Improving Your Finances

10 Tips for Improving Your Finances

The vast majority of Americans are only one $500 emergency bill away from being financially destitute. In fact, a survey indicated that 62 percent of U.S. adults could end up homeless if they skipped even one paycheck. Out of this group, only 58 percent believe that they could make up for an unexpected $500 expense by reducing their other expenses, using a credit card or borrowing money from a family member or friend. In other words, there are far too many people who currently do not have any type of safety net.

To help prevent yourself from remaining or falling into this trap, it is imperative to take a close look at your finances and make a few lifestyle changes. Fortunately, this does not need to be nearly as drastic as most people fear. By implementing even a few of the following suggestions, you should be able to build your savings account and begin more effectively planning for retirement.

1. Do an Audit of Your Bills

When was the last time you sat down and thoroughly looked through all of your bills? If you are like most people, you pay the minimum due amount on each bill without paying much attention to errors or interest rates. Auditing your bills can help you make sure that billing mistakes are not unnecessarily increasing your expenses. Additionally, a bill audit will enable you to learn how much money you would save in the long run by adding $10 to each of your credit related payments.

2. Purge Unnecessary Expenses

We all make choices regarding how to spend our money, and most of us have developed at least one or two unfortunate blind spots. For example, you may really like the version of yourself that goes to the gym once a month and continuously pledges to go more often, but this does not mean that you are making a wise financial decision by paying that monthly fee. Unless you are regularly utilizing something, it is best to purge the unnecessary expense.

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It is also smart to look at unrealistic expenses such as a beer budget that outweighs what you pay for electricity. If you are struggling to build a savings account or pay your bills on time, you must make difficult choices that will include cutting back or eliminating things that serve no practical purpose.

3. Contact Creditors to Renegotiate Your Repayment Terms

Many people erroneously assume that their interest rates and repayment terms are set in stone. However, the truth is that you always have the ability to call and attempt a renegotiation. In some cases, this technique may not get you anywhere. Overall, though, creditors are usually willing to work with people who have kept their payments up and express a need for a temporary or permanent alteration to their repayment terms in order to continue paying everything off on time.

4. Carefully Explore Your Trading Options

There are numerous trading options that can help you save for retirement, but you need to carefully examine everything before you make any large investments. The stock market can be very volatile, but there are some stocks that tend to stay more stable or have a better chance of rebounding quickly. Studying trends and talking to an experienced stock broker will help you make a better choice.

Binary options are another robust possibility that many people are not very familiar with. In a nutshell, binary options allow you to not only get involved in trading stocks, currency pairs, commodities and indexes but to also make predictions about how well they will do within a specified time period. If your predictions are accurate, you can earn a nice return on your investment. You can also use loss protection to prevent yourself from losing a lot of money when your guesses are inaccurate. In other words, binary options can be a viable way to earn some extra money for your savings account.

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5. Utilize High-Yield Investments

High-yield investments do come with a bigger risk factor than turning to treasury bills that have an almost non-existent return rate, but this does not mean that you cannot use them to your advantage. The younger you are, the safer it is to gamble on truly high-yield investments because you will have more time to recover any losses.

Please note that it is not wise for people who have a minimal savings account to invest everything they have into these investments. But if you put 10 to 20 percent of your savings into an investment that has high-yield results and a relatively solid history, you could end up cashing out with a significantly higher amount of money that can then be rolled into a safer opportunity.

However, if you want to play it safe altogether, a money market account should help you earn at least 1 percent annually on your savings. Once you achieve a savings of $50,000, this would provide you with a free $500 bonus after one year.

6. Optimize Your 401k

Your 401k options are probably diversified and very confusing, especially if your employer has put a few plans in front of you that do not come with a detailed description. When you add the recent turbulence of the stock market into the picture, it can become quite terrifying to invest money in this way.

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Instead of running away from this investment opportunity, take the time to more carefully examine your choices. You may find that the plans that are being pushed toward people in your age range are not right for you. After all, a conservative plan will not accrue much money, but it will also minimize your risk of losing everything you have contributed to your 401k.

7. Make a Weekly Savings Plan

In just one year, you can put together a savings account that will enable you to avoid any $500 financial disasters. $10 a week is all it takes to build up a savings account with $520 in it. It may seem unrealistic for people who live paycheck to paycheck to set aside $10 weekly, but you should be able to find this money by prioritizing your expenses and purging anything that is not necessary.

8. Build a Precise Budget

According to a Gallup poll, 68 percent of Americans do not build or use a detailed budget to help them manage their expenses. This is a major mistake that could seriously hinder your ability to get your finances on track. Instead of allowing yourself to spend money without having any idea if you can afford it, you need to sit down and build a precise budget every month. This budget should include everything from your major expenses to minor purchases.

By doing this, you will be able to see how your money is really being used, and this will make it easier to cut out unwise expenditures. Looking at this budget regularly and updating your check register daily is the absolute best way to keep yourself from spending money you do not have.

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9. Take Advantage of Free or Inexpensive Hobbies

We all need hobbies or a way to blow off steam. For some of us, this comes in the form of televised entertainment. The average cable bill has reached an astounding $99, though, so this is not a good way to scale back your expenses. Instead, you should consider cord-cutting measures such as Netflix or Hulu. For a fraction of the cost, you will be able to enjoy countless movies and TV shows.

Walking and many other physical activities are another free or inexpensive way to fill up your spare time, and they come with the added bonus of being good for your health. If you prefer to stay in and do something quiet, Scribd provides readers with unlimited access to eBooks and comic books for less than $9 per month. Adult coloring is another popular trend that has an initial cost due to acquiring the necessary supplies but will ultimately provide many hours of cheap entertainment.

10. Prioritize Your Personal Goals

We all have personal goals aside from the desire to not fall into bankruptcy over one medical bill. Prioritizing these goals can help ensure that you spend your money as wisely as possible. A good example is that some people buy a daily latte from Starbucks but then bemoan the fact that they cannot afford a monthly wellness massage.

If reducing stress and improving your health is your top personal goal, then it makes sense to skip your daily latte so that you can save up for a massage instead. Keep in mind that you could always make coffee at home for a smaller fee. This will give you a personal daily indulgence without derailing your goals. No matter what your personal goals are, you can achieve them in this same way by being smarter with your daily expenditures.

Now that you have access to several actionable tips, it is time for you to put some of them to work! You may also want to download some handy expense apps to make it easier to monitor your spending. With a little practice and some dedication, you can reach your goals and build a savings account that will allow you to avoid financial disaster during an emergency.

Featured photo credit: Piictures of Money via flic.kr

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Holly Chavez

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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