Personal Finance Tips
Americans Get Wiser With Personal Finance – Post Recession – Tips to Overcome Odds
Needless to say, the global recession has left a lasting impact on everyone’s life. While some have lost their jobs, others have gone through salary cuts. Overall production throughout the country; investment expenditures; income; corporate profits; all have dropped to excessive low levels. Therefore it will take considerable time for this country to recover in the post-recession period.
Even if another recession should occur, there are some steps that you can take to minimize the impact. If you want to ensure that you won’t be facing undue hardship in the next recession, you may want to seriously consider the following five tips. They are personal finance tips and we encourage you to follow them carefully.
Repay your high interest rate debts: If you wish to improve your overall financial picture, one of the first steps that you need to take is to repay your high interest debts first. Among all the loans that you owe, you should choose the one with the highest interest rate and repay them first. Unsecured debts like personal loans and credit card debt need to be paid off first as they will normally carry a much higher rate of interest and will cost you more over the term of the loan. To get additional dollars to repay your debt, you may have to revisit your budget and see what expenses that can be reduced or eliminated.
[bctt tweet=”See our personal finance tips here…” username=”HBSMoneyTips”]
Keep on saving funds and create an emergency fund: Did you know that even a small emergency or rainy day fund can help you in a big way in times of difficulty? Keep saving at least 10-12% if your income in your emergency fund so as to create a cushion that can be helpful during an emergency. Some financial planners say that an emergency fund should cover three to six months of expenses, but in a recession or loss of a job, that might not be enough.
Make a stricter budget: As you’re trying to come to terms with the post-recession period, you should follow a stricter budget. What that means is that you need to take control of all spending, and cut out the unnecessary expenses so that additional funds can be used to eliminate debt. Create a comprehensive financial plan and follow it religiously. It may be difficult for a short period, but once the debt is repaid, you’ll have surplus funds in your budget that can be allocated to savings. It’s very important that you get a good handle on your income and expenses, and do your very best to live within your means. It may even be helpful to take on a part time job as well to increase your monthly income, although this is not always possible in many cases.
Consider some serious downsizing: Do your best to reduce your expenses by purchasing only those items that you need and can’t do without. There are various ways to become more frugal and one is to use coupons. Just make sure that the coupons are for items that you normally use and not for unnecessary things. There are many families that can save well over 50% just on their grocery bill alone, by carefully selecting coupons. Just don’t start buying impulse items because you may have a coupon for it. Be careful when using a credit card for shopping as it’s too easy to buy items that aren’t necessary, and then the debt spiral begins all over again.
Negotiate with your creditors: Calling your various credit card issuers should be the first step in any debt reduction program. If you’re having difficulty in making the payments, you can request a reduction in your interest rate and most of them will go along with this. In cases where your card balance has a lot of accrued interest, they will even forgive some part of that. The important thing is for you to communicate with them and let them know that you intend to repay their balance and that all you need is some assistance. Credit card issuers don’t want a delinquent account that will be charged off, and will try to help you as much as possible. But, you must call them and be truthful and cooperative.
If it is difficult for you to use a credit card because of impulse buying, start using a debit card instead. This will help you to stay within your budget and to better control your spending. Instead of shopping just for fun, discover the fun of window shopping. Seek help of professional companies only when you feel that you can’t become debt free on your own.
Author Bio: Martha Jackson is a professional in the field of personal finance and uses her expertise to offer tips on debt related topics. At present, she enjoys an association with various financial websites where her articles are widely read. She can be contacted directly through e-mail at [email protected] Personal Finance Tips
- Personal Finance Tips - June 15, 2013
11 responses to “Personal Finance Tips”
Please join the discussion below...we'd love to hear from you.
Gust Lenglet – Platinum Author
Hey, this is a great article, but you say to pay high interest rate debts first, and I was always taught (and this has always worked for me) to pay your smallest debt off first no matter what it is, then put that money to the next smallest debt to pay it off, then take that money to the next smallest debt…. it’s like a snowball effect that way and pretty soon you have all this money going to pay off the larger debts. Great read anyhow!
I’ve been following most of these tips since I began my career, but it’s nice to be reminded of them. I particularly like the idea of a “rainy day” fund.
We’re focusing on downsizing all kinds of things such as services we don’t fully use: cable, downgrading to slower internet, etc.
Like Derek mentioned, I too try to downsize things such as phone and cable bills. Quality TV programming is something I’m willing to invest in, but my cell phone plan is bare bones. No texting for this guy!
I am poised to retire and since I was beaten up badly by the mismanagement of the economy and a couple of my own poor investment choices, everything is slashed to the bone. Your tips here are great, most of which I was already doing but a couple I will be adding to my program.
Couponing is my family’s life vest! As the post mentioned, just be careful to only select coupons for items that you normally use. Don’t make a terrible impulse buy just because you have a coupon for 50 cents off!
Can’t stress enough how important it is to pay off the highest interest debts first – if you don’t know interest rate details – find out! Also don’t be tempted to pay off all of your smaller debts and neglect the more daunting ones.
It can also be hard to let go of unnecessary assets that could be sold and seriously help reduce debt – let go, it will help you in the long run! Along with only buying completely necessary items, this is a must.
Great post 🙂
Good sound advice Joan, thanks for stopping by.
Joan is completely right – it’s better to tackle your bigger debts first, instead of putting them off until last.
Asking questions are actually pleasant thing if you are not understanding something completely,
but this paragraph offers good understanding even.
I really like the idea that we need to repay our high interest rate debts. I really wish to improve my overall financial picture therefore I believe that I should follow your advice. Thank you for this very nice article.