Guest Blog by Gloria Martinez http://www.womenled.org
Everyone experiences financial setbacks from time to time. Some setbacks are worse than others, but we have to create a plan to rebuild. Whether it’s beefing up your savings after an unplanned expense or making more substantial life changes to balance a financial challenge, getting your finances on track and adhering to a budget takes time, planning, and a little creativity.
It might not seem easy at first, but it doesn’t have to be impossible. Here are a few ways to get your finances back on track without sacrificing the things you enjoy or love.
Find New Ways to Cut Costs
There are lots of ways you can start saving every day. When it comes to meal planning, pack your own lunch for work, dine out less, and start buying your food in bulk from stores like Costco. You can also stop paying for services you can easily do on your own, such as house cleaning and washing your car. Reduce your cell phone and cable bills by shopping for services from alternate providers or abandoning cable altogether in favor of streaming services. You can also save long-term by refinancing your home loan in favor of lower mortgage payments. This can be especially beneficial for veteran borrowers, who are eligible for a VA IRRL (Interest Rate Reduction Refinance Loan). This type of refinance can help lower your monthly payments at a lower interest rate, with very few out-of-pocket costs and nominal paperwork.
Transfer Balances for $0 APR
For some people struggling to pay off credit card debt, your annual percentage rate could be so high that you can’t afford a monthly payment that will actually make a dent in your debt. There are two common ways to work around this. One, you can ask your credit card provider for a lower APR. You might be able to convince them to drop it significantly if you’ve been a cardholder for a long time and have a good history of making payments. If they won’t budge on your APR, look for a card that offers a 0 percent APR on balance transfers.
Transferring your balance works best if a card you already own is offering a deal on balance transfers. That means you don’t have to take out another line of credit. Either way— with a card you own or apply for — be sure to pay attention to the amount of time you have 0 percent on balance transfers. It won’t be indefinitely — usually between nine and 15 months. You’ll need to make a budget to help you pay it off during that time.
Use the Snowball Method to Pay Down Your Debt
The “snowball method” is a slow but steady attitude toward paying off your debt. It’s almost always a success, but it only works if you aren’t accruing debt while you are paying it off. Essentially, you pay as much above the minimum as you can on all your debt, except for the smallest balance. On your smallest balance, you pay double, triple, or more so that you can pay it down quickly. Once you have paid that debt off, you take the same amount you were paying and add it to your monthly payments for the next smallest debt.
You continue to do this working your way up to your highest balance. Thus, the idea of a snowball — you are letting the accumulation of your payments get bigger and bigger like a snowball rolling down a hill. By the time you get to your largest balance, you’ll have combined the payments of all your other debts into some very large monthly payments.
Getting your finances back on track is one thing — staying the course is another. Before you make the effort to pay down debt, be sure to make a realistic household budget to keep you aware of your financial situation and practicing good habits to help keep the debt off. The next thing you know, you’ll have complete control over your finances.
Thank you to our guest contributor Gloria Martinez. To join KG Meyer, PC’s email newsletter, please fill out the form below.