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10 Financial Decisions You Should Stop Putting Off

10 Financial Decisions You Should Stop Putting Off

It is never too late to start taking care of your financial needs, if you recognize that you need a well developed financial plan to meet your current and future financial needs. If you are still unsure where to start and what decisions to make, here is a list of top 10 financial decisions you shouldn’t be putting off to kick start a better a financial future for yourself.

Start early

If your finances are not on track and take time to really think about them and start now. Now is the best time for you to start building a secure financial future even if you are too old to save much.

Stop relying on your single income

Find new avenues to increase your income. If you are relying on just one income, be on an active lookout for developing a second stream of income. You can do part-time jobs, online work , work from home, sell on ebay and Gumtree but start looking for new and innovative means of increasing your income. Higher level of income can help you to not only achieve mental comfort but it will also help you pay off your debts easily or save more.

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Start building an emergency fund

Do this by making regular contributions to the saving accounts offering you best returns. A basic rule of thumb is having savings at least equal to 3 to six months of salary but it can vary depending upon your circumstances, family size and income level. A good way to trash your savings is to save it into money market funds. If you are living in UK, you have a really nice way of saving your emergency funds in tax-sheltered individual saving accounts or ISAs as they are normally called.

Automate your finances

This will help you develop the habit of saving automatically as well as help you pay off your bills and debts online. Remember, there is always a choice to automate savings or debts. A better way is to automate your savings and expenses rather than debts because if you automate debts, you may end up not having enough cash flows in the end to fund your other expenses.

Decide about timing and location of your retirement

Start saving for your retirement now because if you start now (if you are not in your 40s already) time will be on your side and with compounding impacts, your retirement savings can easily reach your target level once you reach the age of your retirement. If you are young and starting your career, look for investing into IRAs and 401(K) if you are employed. Sooner you start saving for your retirement, a bigger saving pot you will have in the end. With cost of medical care increasing, chances are that most of your savings will go to your healthcare so save enough so that you can really enjoy your retirement savings.

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Develop a plan to pay off your debt and stick with it

There are different methods to start prioritizing your debts and paying off. Snowball method suggests paying of smaller debt first whereas another technique of paying off your high interest rate loan first is also often recommended. However, debt also has an emotional drain on all of us so you can start to prioritize debt on the basis of their emotional intensity rather than their cost.

Have a life insurance policy in place

In the case of an emergency it can help your family to actually get some financial cover. There are lots of insurance policies ranging from covering damage to your appliance to your life but put off all insurance decisions but one of having a life insurance policy in place. Having a right amount of life insurance however, can vary depending upon your individual circumstances but focus at least on having a sum assured at least equal to 3 years of your current salary.
< h2>Start to save for your down-payment of your dream home

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Paying as much as you can in down-payment can reduce your monthly mortgage payments as well as interest rates. If you are planning to buy your home now with no or very little down-payment in savings, it is better to rent rather than buy.

If you are considering buying your own home, you may have to recheck whether you should buy or rent

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If costs associated with buying such as interest rates, repairs, taxes etc are greater than what you can afford, it is better to rent rather than buy.

Start to build your credit history

It can help you get good rates when you finally decide to buy your own home. Credit cards can be a great way to develop your credit score provided you don’t mess with them. Use credit cards to develop your credit history rather than as a tool to buy things which can depreciate in value quickly.

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Personal finances can easily be managed provided we take right decisions at the right time. When in doubt, always seek advice and focus more on things which can help you save more. One final word! Start now to track your expenses not to know where your money goes but to know how you can discipline yourself by cutting some of the unnecessary expenses.

Image Credits :

Featured photo credit: Morgue via cdn.morguefile.com

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Adnan Manzoor

Data Analyst & Life Coach

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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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