The past is the past and what’s done is done. You can’t go back and uncharge the TV you bought last year or the plane tickets you used 2 years ago. Unfortunately, you still might be paying for a big ticket item like that even years later. Even if you don’t have a ton of credit card debt or any at all (and good for you if that’s the case!), the average person has something they can do to improve their financial present…or future.
If you’re just starting out or rebuilding
– Start conquering your debt now. A debt management plan is a great way to pay off your debt in 5 years or less, which is usually a much shorter time period than if you paid on your own. Usually interest rates and/or payments on a DMP are reduced, too. This can result in HUGE interest savings.
– Build emergency savings. Not having an emergency fund is what causes many of us to use credit cards. We may have to pay for Fido’s unexpected $1000 visit to the emergency vet, our own medical bill, or an appliance repair/replacement. Something is bound to come up. So instead of letting it be a cause of debt, plan ahead and try to start saving at least $25-50/month whenever possible.
– Start periodic savings. For example, if you know that you usually spend $500/year on your vehicle maintenance and tabs, set aside what you can monthly so when you need to make a repair, it’s less of a burden on your bank account.
If your debt is paid off and you’re looking for financial wellness and building wealth
– Focus on growing savings. If you don’t have to worry about credit cards anymore, figure out what your total monthly expenses are then multiply that by 3. Your goal should be to have at least 3 months’ worth of your monthly expenses in savings. Set aside monthly as much as you can afford, keeping in mind the other suggestions below.
– Prepare for retirement. No matter what age you are, it’s always a good idea to think about retirement and how you’re going to pay for it. If you want to enjoy your golden years instead of working to live, think about investing. The sooner you start, the better. For more info, visit Let’s Make a Plan.org.
– Pay off larger debts sooner. You don’t have credit cards, but you still may have a mortgage, car payment, or student loan payment. Make higher payments toward any that you can, starting with the loan with the highest interest. Paying it off sooner will save you money in the long run; plus when something is paid off, that means you can take that payment and put it toward savings or retirement.
Regardless which financial life stage you’re in, there is always something you can do to improve your situation. They say go big or go home, but I say ‘just go’ because you have to start somewhere. It’s like that quote about working out: even if you’re just taking a walk, you’re still lapping everyone on the couch right now.
If you’re not quite sure where to get started to improve your finances, LSS can help. Give us a call at 888.577.2227 to schedule a financial counseling appointment or click HERE to get started online. We’ll help you create a plan of attack to start conquering your debt and achieving your financial goals!
Author Elaina Johannessen is a Program Director for LSS Financial Counseling.