7 tips to take control of your finances in 2009
With 3 million job lost, 2.4 million home already lost to foreclosure, and six million homes expected to be foreclosed upon before this financial roller coaster is over. Many of us now realize that it is now time for us to sit down, take a good look at our current financial situation, and make good on that promise to start an emergency fund, pay off those credit cards, and reduce our debt burden. With many of us struggling to put that extra money into our pocket, here are seven easy tips to help cut expenses and take a more proactive approach to managing your finances in 2009:
- “Build a Budget.” Start tracking your daily expenses to help you figure out where you money is going. Secondly, start managing your money by using free online budgeting websites , such as:
- Build up your cash reserve. While most financial experts tell you to keep 6-months of cash reserves for emergencies, many of us cannot afford to save that much. Therefore, my advice to you is to reduce spending and save as much as you can, until you have 6-month of cash reserves available.
- Know your FICO score. The fico score is used by 90% of the nation’s financial institutions and is your key favorable terms on auto loans, credit cards, and mortgages.
- Go credit card surfing? If you one of the millions of Americans who carry a monthly credit card balance each month. Go credit card surfing to find a low-interest -rate credit card.
- Boost you take home pay. By adjusting your withholdings (form W-4) you can get more of your paycheck to help. According to the Internal Revenue Service, the average tax refund is $2436, which would entitle you to an extra $2625 annually. This is an extra three exceptions, if you are in the 25% tax bracket.
- Raise you deductible. By increasing your car insurance and homeowners, deductible from $250 to $100 can save you $316 annually. You might want to give your insurance agent a call.
- Protect you identity. As you may already know, identity theft has become a national epidemic. The federal Trade Commission estimates that nearly 10 million victims each year cost business’s $52 billion and consumers $5 billion. As a result, assess your risk to identity theft and select some proactive step to avert it. If you want, a comprehensive plan, contact your insurance company or signing up for identity theft protection service.
The Four Axioms to Debt Free Living
1.Track daily expenses. By doing so, you will see how money slips through the cracks each day. If you pay close attention to the details of what you are spending on a daily basis, you will discover ways to take control of your frivolous spending and cut back on unnecessary items/purchase.
2. Target your goals. By targeting you goals, you will
give yourself a starting point and endpoint to achieve. By
achieving your goals it give you a sense of self-achievement and
will give you more incentive to follow axiom one. Remember to
write down your goals and then answer to the following
questions:
•Where you are financially right now?
• Where do you want to be?
• Are you over-in-debt?
• How long will it take to accomplish this goal?
Lastly, keep your targeted goals with you all of the time as a constant reminder.
3. Trimming works in conjunction with tracking your expenses and targeting your goals to help you set up your plan. With trimming you establish a standard of living which is lower than your current income rather than at the limit of your credit power. Once you start living on less than you earn, you can then pay yourself first in order to accelerate debt repayment. For instance, you should take out, at the beginning of each month, 5%, 10%, or even 15%, which has been identified as, frivolous spending from axiom one, to reduce debt and that will force you to live on what is left over.
4. The fourth and final axiom is Training. This axiom deals with investing money after you are out of debt so that you may earn interest and set up a retirement. If you invest the money wisely while working, you could live off the interest and/or dividends depending upon how much you invested.
The basic, overview of all for axioms are:
1. First Axiom: Track daily expensesby writing them down.
2. Second Axiom: Target realistic financial goals, write them down, and imprint into your internal computer.
3. Third Axiom: Trim your living expenses so you can live off what you earn, then spend the difference to get out of debt and buy assets that appreciate. Remember to pay yourself first.
4. Fourth Axiom: Discover the power of compound interest, learn investment strategies of stocks, annuities, income plays (covered calls and protective puts) and develop a long-term relationship with a financial advisor.