If you’re like most people, chances are you’d love the opportunity to regain control of your finances. Imagine if you had no debt repayments to worry about each month. How much of your income would be left to spend on whatever you wanted if you didn’t have to worry about repayments?
The reality is, making the effort to fix your finances can be the key to getting rid of those debt balances and boosting your credit score at the same time. Here are some tips for getting a better grip on your finances, starting today.
Review Your Statements
The first step towards fixing your finances is to take a close look at your recent statements. Take note of your credit card spending and be honest about any emotional spending patterns you notice. If you use a debit card attached to your checking or savings account, look closely at the amount you’re spending and compare it to the amount of money being deposited into the account.
Add Up Your Expenses
Have you ever stopped to add up exactly how much all your debt repayments, bills and living expenses cost you each month? Create a list of your repayments and bills and add up your total. It can be eye-opening to look at the full amount as a single figure.
Far too many people use the excuse that they don’t know enough about financial things, so they don’t try to improve their situation. Books about your credit score can be a helpful resource and make it easier to understand what steps you should take to improve your credit file. You’ll also learn what lenders consider a financially responsible customer, which can help steer you in the right direction.
Renegotiate Your Expenses
If you have your list of expenses in front of you, take a bit of time to call each of your providers and see if you can renegotiate your expenses. For example, you might be able to bundle some of your insurance policies together in return for a discount on your premiums.
Call your credit card company and ask if they’re able to offer a better deal on the interest rates you pay. You might also be able to reduce the amount you spend on cable, internet, or phone charges by renegotiating your package deal.
Get a Free Copy of Your Credit Report
Order a free copy of your credit report and take a careful look what’s on there. If you have entries that don’t belong to you or debts that have been entered in error, get them corrected. If you can fix any credit problems you find, you could improve your credit score. Boosting your score could also mean qualifying for a better deal on your interest rates, which could reduce your monthly repayments even further.
Pay Off Personal Debts
If one of the biggest items eating into your income are debt repayments, create a plan to pay off those debts. Carrying a credit card balance from month to month can attract high interest charges. By comparison, paying down those balances reduces your interest costs and frees up your income each month.
Set Up Direct Debits
If you have regular payments each month, why not arrange to pay them by direct debit each month? When the payments are coming out automatically, you reduce the risk of being late on any payments, which helps to boost your credit score and reduces late payment penalty fees. Just be sure you always have enough funds in your checking account every month to cover the direct debits coming out, and get to know your rights.
Automate Your Savings
If you spend all of your income just keeping up with repayments and bills, chances are you don’t have much left over to put towards building your savings. However, if you’ve managed to reduce your monthly expenses by renegotiating with your creditors, why not put the amounts you’ve saved away into an emergency fund? Arrange a direct debit to deduct payments from your checking account to your savings account automatically. Before long you’ll be building savings that could help cover those larger expenses without the need for adding to your credit card balances.
Regaining control of your finances can take a little bit of patience and planning. However, once you’ve gotten your finances in order you should find it much easier to stay in control of your debts and build your savings at the same time. As a healthy side-effect of fixing your finances, you should also notice that your credit score improves too.
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