Most people would love to regain control over their finances and escape the cycle of debt. After all, there’s nothing fun about spending all of your hard-earned money just keeping up with debt repayments and having nothing left over.
Fortunately, there are some easy ways you can get a better grip on your finances and boost your credit score at the same time.
Create a Snapshot
There’s no point creating an end goal if you aren’t clear about your starting point. Create a list of all your outstanding debt balances. Then grab your statements and make a note of the interest rate you pay on each of those debts. Next to the interest rate, write down the monthly repayment you make on each of those debts.
Now tally up the totals. It can be a bit of a shock to see your total debt written down as one number. It’s also eye-opening to see exactly how much you pay on all your debt repayments each month, but it’s important to get a real snapshot of your starting point so you can start fixing the problems.
Negotiate Interest Rates
Call your existing lenders and ask if they’re willing to negotiate better interest rates on your outstanding debts. Paying less interest could mean reducing your monthly repayments. Some banks and lenders will be happy to negotiate if it means keeping your business, so it’s worth a try.
Boost Your Credit Score
If your credit score is impaired, your creditors may be reluctant to offer better deals on interest rates. However, if you’re keen to get a grip on your finances and get out of financial hot water, it’s important to take positive steps to improve your score.
Seek professional credit restoration advice from a reputable company and ask what you can do to start boosting your credit score.
Let’s face it. Trying to keep up with several different repayments at various times throughout the month can be challenging. It also increases the risk of overlooking one and ending up with late payment fees or penalty charges.
You’ll find it easier to regain control of your finances if you streamline your debts as much as possible. Roll some of your outstanding debts into a consolidation loan. You’ll only have one repayment each month to worry about instead of several.
A consolidation loan could also reduce the amount of interest you pay on your debts and lower your monthly repayments at the same time. If you’re struggling to keep up, lower debt repayments could mean less strain on your budget overall.
Catch Up Past-Due Debts
If you have some unpaid debts or repayments outstanding, work on catching those up. Those unpaid amounts could be affecting your ability to negotiate for better interest rates on your outstanding debts.
Get a Better Deal
When most people think about fixing their financial situation, they tend to think about little things. Sacrificing a cup of coffee on the way to work or brown-bagging your lunches can help stretch your budget a little, but on their own they won’t make a massive difference.
Instead, take a careful look at what you pay on your utilities, insurance premiums, mobile phone and internet charges, cable costs, and any other regular bills you pay. Then take a bit of time to shop around and compare your options.
Raise your insurance deductible and ask your insurer if you can save even more on your premiums by bundling several policies together. Check whether you can get a better deal on your mobile phone and internet packages. Reducing the amount you pay for things you already use can make it easier to stretch your budget further.
Getting a grip on your finances is all about taking control over how much you spend. Reducing your expenses and paying off your debts means you’re not spending all of your hard-earned income just trying to keep up each month.
Photo: 401(K) 2012
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