What is something most Americans have but don’t want?
Student loans, credit cards, mortgages, and miscellaneous debts are weighing down U.S. households. Sitting at $14 trillion, consumer debt is at an all-time high.
One of the worst parts about debt is that once you’re drowning in it, you begin to feel as if there isn’t any hope. However, we’re here to tell you it doesn’t have to be this way! Once you learn the best tips for managing your finances, you can take back control of your financial independence.
Since you’re reading this article, it’s clear that you know it’s time for a change. Let today be the day you take a stand for your future.
Read on to learn how to manage your finances and live debt-free.
Snowball Your Debt
If you have bad credit because you’re currently in debt, you can use the snowball debt method to achieve financial independence. First, you’ll need to list all of your debts, going from smallest to largest. Don’t pay attention to the interest rates for now.
Next, start making the minimum payments on each of your debts, except the smallest. Once you have your minimum payments under control, put as much money as you can towards your smallest debt. Finally, repeat all of these steps until your completely debt-free.
Create an Emergency Fund
Do you have an uncertain financial future? For instance, are you a freelancer, or someone who doesn’t depend on a stable weekly income?
If so, you should hold off paying your debts until you can create an emergency fund. Your emergency fund should include 3-6 months of living expenses.
If you don’t have an emergency fund, and you run into an unexpected expense, sites like iCash can help. Lastly, we find the best way to build an emergency fund is by making a budget and sticking to it.
Managing Your Finances for Retirement
Next, let’s look at how you can start managing your finances for retirement, even if you have horrible credit. Here are a few of the best retirement savings plans:
- Traditional IRA
- 401 (k)
- Roth IRA
You mustn’t let your debts, or bad credit status, prevent you from contributing to your 401(k). While you continue paying off your debts you should be budgeting a portion of your income towards retirement savings. Once your debts are all paid off you can start using the funds you were putting towards debts to contribute to your retirement savings.
Financial Freedom Is Possible
Congratulations! You’re one step closer to managing your finances the right way so you can finally have financial independence. While it may seem like building your credit is a never-ending journey, we promise it’s not. As long as you create a budget, and stick with it, you’ll be debt-free before you know it.
Go ahead and grab a piece of paper right now and start writing down all of your debts. Finally, create a budget to see how much you can put towards each debt. For more ways to be successful, read another one of our articles.