Debt Consolidation Lowdown

It took more than 20 years but you’ve finally done it, you’re on your own now. For some of you, you’re just now graduating from college and have amassed a large pile of debt. For others, you’re finally leaving the comforts of your parent’s home and have had a rude awakening to the cost of living. Don’t worry though, you’re not alone.

Statistics show that 40% of the people in the United States live beyond their means and nearly 50% of all students are in credit card debt. Fortunately for you, we know what you’re going through and how to fix it.

To get your finances back on track you’ll need financial discipline and a few minutes to read over this guide we’ve compiled to help you manage your personal finances.

General Tips

1. Maintain a budget to monitor how much and on what you’re spending. This will help you cut unnecessary expenses and save money. If you are budget-challenged, use these websites to create a workable budget: Quicken, Microsoft Money, or Moneydance.

2. Pay yourself first. Instruct your bank to transfer 5 to 10 percent of your salary to a savings account.

3. Maintain a healthy bottom line. The bottom line is the difference between what you earn and what you spend. If you are spending more than what you earn, you must rework your financial situation.

4. Set some emergency money aside for unexpected expenses. Failing to plan for emergencies is inviting financial disaster.

5. Pay your bills on time. This is the best way to avoid getting into debt and wrecking your budget.

6. Patience is key. It takes around 21 days for a daily behavior to become a habit. So when you tighten your financial belt, expect a difficult first month.

7. Know your limitations. Let your paycheck determine how you live your life, not your neighbors.

8. Set financial goals for yourself. For instance, if you want to buy a home in the next five years, you’ll work toward saving enough to purchase that house.

Personal Health

9. Practice healthy habits. If you’re a heavy drinker try to cut back, and for all you smokers try and stop altogether. A healthy body costs far less to maintain than an unhealthy body.

10. Utilize free or low-cost health care services such as clinics and family centers.

11. Try the generic medicine instead of the top of the line stuff. You’ll pay much less for it and find that it works the same. This is especially true for medicines prescribed by your doctor.

12. Sign up for Medicare before you turn 65, even if you have several years left before you retire.

13. Write your will. If you have dependents, no matter how little or how much you own, you need a will. This will also save your loved ones a lot of heartache and prevent any financial turmoil once you are gone.

Shop Wisely

14. Compare prices. Sometimes store brands are cheaper and as good as national brands. Thoroughly investigating each purchase can help you get the best value.

15. Cut and use coupons.

16. Plan your meals before you shop. Once you’ve done that, make a list of all the items you need to purchase.

17. Avoid eating out all the time. Eating out can be a huge drain on your resources and your health as well.

18. Give yourself a few days to decide before you take a final decision on purchasing an expensive gadget or appliance. Chances are, you’ll realize you can live without it.

19. Downsize. Always go in for the super-size ice-cream tub? Try one size smaller.

20. Avoid the Deli counter. You will significantly reduce your weekly grocery bill by skipping the deli counter.

21. Check your receipts. Store receipts can have errors — errors that may cost you more than a little money!

Monitor your Money

22. Enforce the habit of using cash instead of credit cards, and don’t forget to keep track your cash purchases.

23. Get the best deal. It’s a good idea to shop around before opening a checking account.

24. Keep track of your credit card purchases. Save copies of receipts and compare charges when monthly statements arrive.

25. Lower your interest rates. Call your credit card company and ask them to lower your interest rate. Alternately, you could select a credit that offers advantageous interest rates. This helps keep your payments within manageable limits.

26. Check your credit reports annually. Occasionally serious errors creep into credit reports. If the error goes unnoticed, it could permanently damage your credit.

27. Avoid ATM machines that charge fees. A better idea is to withdraw a fixed amount each month and stick to it.

28. Never bounce checks. Not only will you lose a hefty sum as fine, a bounced check can also hurt your credit record.

29. Guard your identity. Identity theft is a reality and could cost you a whole lot of money. Reduce the risk of theft by keeping all items that contain your personal information in a safe place at home.

30. Be Selfish. Never cosign a loan for someone else. If the person you co-signed for defaults on the loan payments, you’re held responsible by the lender.

31. Stay away from payday loans. These loans force you into a debt cycle that is almost impossible to get away from.

32. Consolidate your student loans. This will increase the repayment time, but will also reduce your monthly outlay.

Take care of your House

33. Maintain your equity. Think twice before you use your home equity loan or line of credit for items other than home improvements.

34. Refinance your mortgage. Even a 0.5 percent difference in rates can save you a considerable amount of money.

35. Make your home energy-efficient. This way you’ll be able to reduce your heating and cooling costs. Also, be sure to switch off lights and other appliances that are not in use. You’ll be surprised how much money you can save by being careful.

36. Maintain the high-cost items you own. If you take good care of your refrigerator, lawnmower, etc., they’ll be more efficient and will last much longer. This saves you thousands on utilities, repair bills, and replacement costs.

37. Make money from your junk. You could sell the things you don’t need on Ebay and make money while reducing the clutter your home.

Maintain your Car

38. Before you buy, compare insurance, maintenance, and repair costs for different models. A model with low operating costs can save you thousands of dollars.

39. Drive safely. It keeps your insurance down. Insurance companies charge less for drivers who have no violations or accidents.

40. Take care of your car. By keeping up with your car’s routine maintenance, the car will run better and last longer.

41. Go hybrid. Initial high costs lead to high savings later on. Hybrids are more expensive than their traditional counterparts, but you can save money on gas. You could also receive a tax credit of up to $3,400.

42. Carpool. Avoid driving to work everyday. Try other means of getting to work, like carpooling, using the public transport system, or even walking.

The Importance of Insurance

43. Try purchasing car and home insurance from the same firm to reduce your costs.

44. Raise your insurance deductibles. This will lower your premium.

45. You need health insurance. It may seem a drain on your resources but just think of how much money you will lose if something seriously injured you and you didn’t have any insurance to help pay the costs.

46. Insure your home. Homeowners insurance provides coverage in the event of damage to your property, as well as liability for injuries and damage you cause to other people.

47. Go Term. Most people tend to go in for term life insurance for the simple reason that it works out a whole lot cheaper than a whole life insurance. Make sure that your life insurance policy is enough to replace at least five years of your salary.

Making the Most out of your Education and Career

48. Go to college. Research shows that people with college degrees make on average significantly more money than those who don’t.

49. Reduce education costs. Expensive colleges will mean taking on more loans. Consider community college courses where possible.

50. Choose a job-oriented degree. Take up courses that will ensure a good career with enough money once you complete your education. This will help you repay your loans.

51.Continue your education. Your education doesn’t stop once you are out of college. The more professional qualifications you have under your belt, the higher your value.

52. Know your worth. Evaluate your skills, productivity, job tasks, contribution to the company, and the going rate for what you do. A difference of even a few hundred dollars can make a huge difference.

53. Love Your Job. Being good at what you do and enjoying it will help boost your career beyond your wildest dreams.

54. Use all benefits offered by your employer. For instance, you could save a lot of money on medical and dental fees if you use the coverage offered by your employer.

Don’t Forget about Taxes

55. Keep track of all the important tax dates and deductions. File your taxes correctly and avoid late payments.

56. Itemize your deductions. If your tax breaks are more than your standard deduction, you stand to gain.

57. Increase your 401k or IRA contributions. This will give you a few tax breaks and help save for your retirement.

58. Maximize all of your tax benefits. Keep an eye out for Hope Scholarship Credit, Lifetime Learning Credit, Child Tax Credit, Earned Income Credit, and Child Care Credit. Contact the Department of Education at 800-4FED-AID for more information.

The Art of Investing

59. Invest your spare cash instead of letting it lie in a savings account.

60. Build and diversify your portfolio. Invest in certificates of deposit or money market funds for your short-term goals, and the stock market for your medium and long-term goals. No more than 10 percent of your portfolio should lie with any one company

61. Plan for your retirement. Accumulate and invest your funds in such a manner that you get a predictable income stream once you’ve hung up your shoes. Use the Social Security Retirement Planner to ensure that your retirement goes smoothly.

Everyone Loves a few Freebies

62. Get money that’s owed to you. Don’t know how to do it? Read Assets Unknown: How to Find Money You Didn’t Know You Had, by David Folsom. Alternately, you could check out unclaimedassets.com.

63. There are several websites on the Internet that offer goods well below cost, and in many cases free. For instance, Freecycle.org and Freebies Magazine.

64. The net’s here to help you again. Heard of Refund Cents? All you need to do is pay a subscription fee to get alerted on new deals. You can save on almost everything from groceries to clothes.

65. Ask merchants for coupons and discounts. You can either check the Internet or contact a company directly for coupons.

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Keep in mind that no amount of money can truly buy happiness. If you’re so busy trying to be frugal about every nickel and dime that you forget to relax, you’ll find yourself in a very unhealthy situation. It’s more important to enjoy what you do and live a good and happy life.

This entry was posted on Sunday, March 18th, 2007 at 9:27 pm and is filed under Features. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.