Thursday, December 23, 2021

Financial Tips to Make Your Life Easier

As we are in the midst of one of the most financially taxing times of the year, I thought now was a good time to provide a few easy money management tips that may make your life just a little bit easier. 

Don't spend above your means

This one might seem like a no brianer, but it can actually be very difficult to follow, especially during the holidays. Things like social pressure can make you feel guilty for not buying in excesses, and people with a kind heart often want to give their loved ones the things they think they deserve or help those less fortunate, past the point where they are able. But material things are not as important as being secure in your finances, and the people you care about will understand if you give them a modest heartfelt gift instead of something over the top. You are what matters to them. Don't forget that. 

Never Pay Interest (*when possible)

No one enjoys paying interest, but many people don't realize or try not to think about how much that actually costs them. If you have the money to pay for things up front, do it. If you use credit cards for points, miles or other perks, but have the funds available, pay off the full balance when it is due. Interest charges can be crippling. A $5000 purchase paid off with minimum payments only would take THIRTY YEARS to pay off, and end up costing almost five times as much. Almost $25000 for that five grand a vacation is not worth it. 
Either don't spend it unless you absolutely need it or pay it off in full so you are not paying interest. If you have a lot of credit cards, especially non essential ones like department stores and ones without any reward benefits, it might also be prudent to consider canceling some of the accounts to reduce the urge to shop when it is not in your finances to do so. 

Consolidate Debt

For debts that you are not able to pay off in full right now, there are still ways that you can make it easier on yourself. One great way is with debt consolidation. Essentially, that is taking a new loan, and using that loan to pay off the debts, leaving you will only the debt of the new loan.

If you are unfamiliar with the process, it may seem a bit redundant, but the objective is, the new loan has a lower interest rate. So you are paying off a debt with, say, a 20% interest rate, and replacing it with a new loan that may only require 11%. That can be a huge difference in terms of total amount paid, especially if you are paying only the minimums, as I went over before.

If you have other questions about debt consolidation, there is a lot of great information here. There is also information about credit counseling and other great tips for creating a better financial future.

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