2020 has clearly revealed that people need to save more money. Even though the government has handed some out, it is not enough for many people. To be better prepared for 2021, you need to save money. This will be easier to do after you reduce your debt.
Debt Consolidation Companies
If you are considering going with a debt consolidation company, you need to rethink it. This kind of company will not only increase your debt, but it may also damage your credit score. Most of the things that they promise to do you could do for yourself. This includes contacting your debtors and reducing your overall debt.
If you are having difficulty paying your bills right now, your creditors will likely understand if you talk to them and explain your situation. Whatever you do, keep on paying the minimum amount on your bills. Failing to do so will hurt your credit.
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Avoid Increasing Your Debt
One of the worst kinds of debt you can take on is credit card debt. It is one of the worst kinds because credit cards often come with high-interest rates. Things become even worse if you only pay the minimum amount. Doing this means that it will take many years to finally pay it off – even if you do not add more debt to it. Reducing credit card debt is one of the best ways to get a little more extra money in your pocket each month.
Money can be made in day trading, but you need to be careful how you do it. If you do not know what you are doing, it is best to have a professional company invest your money for you. While you are younger, you want more money to go toward the stock market (up to about 70%) and the rest in more stable investments such as bonds. As you get older, you will want to reverse the percentages so that your earnings are protected and not at risk.
Reduce Your Monthly Food Costs
One of the biggest bills that some people have today is their food bill. On average, food bills are over $900 per month. Besides buying a lot of unhealthy food, such as sodas and snacks, most people could reduce their monthly food expenditures and put some of it into savings or reduce debt. Cooking more meals at home can lower your food costs and still provide you with tasty meals. Reduce the sugary foods and you will have fewer dental and medical bills.
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Retirement Is Coming – Save for It
If you do not start saving money when you are young, sooner or later, you will wish you had saved some money for retirement. Social security is not enough to retire on by itself. You will need some additional income just to make ends meet. If you have any debt after retiring, remember that your monthly payments will reduce social security even more. Aim to have all your current debts paid before you retire. Remember that medical bills will likely increase as you get older.
Other Ways to Get Cash
If you want to reduce debt more so that you pay less interest or completely get out of debt, there are additional ways to get more cash. Perhaps one of the best ways would be to get a side job. This would enable you to reduce debt faster and earn more money toward social security. You could also cash out a whole life insurance policy, trade-in your car for a less expensive model (or, sell an extra car), get a home equity loan, or, if you are a senior, get a reverse mortgage.