Many people will look at the year 2020 as a year of financial disaster. While some financial problems certainly could not have been foreseen, you can enter 2021 with some hindsight that will prepare you for the incoming year. If you have found money to be tight recently, these money management tips will help you this coming year.
Reduce Debt Where Possible
One of the biggest reasons for financial stress is having too many bills each month. You may be able to reduce your monthly payments quickly in one of two ways. The first method, available for those with a better credit score, is to get a new balance transfer credit card.
This type of credit card will let you transfer existing credit card debt. It will give you zero or low-interest rates on it for a limited time. You could enjoy this special interest rate for as long as two years with some cards. This would save you a considerable amount of money. It will help you reduce your debt faster than other means if you do not add new debt.
A second method, which may be available to you even if the first method is not, is to get a personal loan and consolidate your debt. When you do this, it will give you a lower interest rate than what you have on your credit cards. It will reduce your total cash outflow each month. By getting a large enough loan to cover all of your bills, it gives you a single payment to make each month.
Pay Down Your Debt
When you have less debt, it also means that you will have less stress – if money gets tight again. When you get your stimulus check, use it to reduce your debt. Or use it to completely eliminate a bill. You will be happier that you did.
Eliminate Optional Bills
If you have optional services each month, such as paying for gym memberships, cable TV, buying fancy coffees daily, eating out often, etc., you can achieve better money management by changing your activities. Eliminating optional services will enable you to reduce your debt faster if you use that money saved to reduce debt.
Build an Emergency Fund
Having some cash on hand for an emergency or for when things get difficult will enable you to be prepared. An emergency fund will enable you to avoid getting a loan or putting it on a credit card. Overall, it means saving money and not increasing your overall debt.
Refinance Your Mortgage
If you have had a mortgage for some time, chances are very good that you can lower your payments and save money with a new one. Interest rates are very good right now. If you have good credit, you could save thousands of dollars by making the change.
Get a Side Job
Adding a new source of income to your current job can also help you be better prepared for the new year. You can reduce your debt faster, save more money for that special trip or item you want, or help you catch up with your retirement savings.
Budget Your Money
Taking a careful look at where your money goes each month will help you see how and where your money goes. Most likely, you will quickly find expenditures that you could have done without. Watching out for your finances more carefully will help you be more ready to weather the next financial storm and enable you to become debt-free sooner.
What are some money management skills you follow? Reply using the comments below.