Recent world events have left many citizens in a financial scramble. If you are facing some serious financial problems in the coming year or are worried about your low savings rate, the tips below can help.
1) Figure Out Where You Are
If you feel like you’re always out of money before the end of the month, it’s time to figure out why. Set up a spreadsheet with 4 columns:
- What do you owe?
- How much is the minimum payment?
- What’s your interest rate?
- What’s the total balance?
For those who are feeling payment poor, sort your list by the minimum payment due and carefully review the top five items. Can you consolidate some of those debts? If your biggest payments are related to a vehicle, could you refinance those loans to extend the terms and lower the payment? For those who are worried about making their house payment, getting rid of a car or getting a consolidation loan could greatly reduce your money stress. Each time you make a payment, update your spreadsheet and track your progress.
2) Monetize Your Time
If money is very tight, it’s time to look for ways to earn more and reduce expensive time. For example, if you love to go to concerts and movies, look for work in the box office or volunteer as an usher so you can see the show for free.
You may feel the need to do something radical. For example, folks in serious financial trouble may choose to quit worrying about their cable bill and sell the television. While this may seem extreme, it will free up an astonishing amount of time. Avoid side hustles that require you to spend money to earn. There are many ways to earn money that require no investment.
3) Borrow From Yourself
For those wondering “can I sell my house to avoid foreclosure?” the answer is yes, but you will need help to time it right to put as much money in your pocket as you can once the mortgage is paid off.
Once you’ve built your spreadsheet and know your total debt, it may be time to talk to your lender about refinancing your home and pulling out cash. A key thing to remember when refinancing secured debt, or debt with collateral, to cover the unsecured debt, such as credit card debt, is that you can lose your house because you spent money you didn’t have on vacations and dining out. If you’re refinancing your home to wipe out credit card debt, put the cards away first. Don’t cancel the accounts; it will impact your credit rating.
4) Expand Your Circle
Is it time to get a roommate? Are your current friends expensive? Do you have an odd coworker who always brings their lunch and spends each vacation camping in the woods?
We are the sum of the folks we spend time with. If you know some folks who are known for their frugality, it’s time to improve that relationship and ask for help. The ability to live on very little money is incredibly empowering. People who can teach you how are a resource that you need to tap.
5) Change Your Activities
If you own a bike, make time every weekend to go for a ride. If you have a dog, make sure they get at least one good walk a day. Figure out ways to avoid spending money, burning gas, or paying for entertainment so your life is full and busy without opening up your wallet. This skill will suit you well even when your financial situation improves.
6) Focus On Health
Carefully review your grocery store ads each week and build meals around the cheapest veggies. Switch from fresh to frozen fruit for smoothies and baked goods. Build a collection of “planned-over” foods. Small bits of leftover meat and veggies can be used to make wraps for the next meal.
7) Seek Quiet
Money worries will quickly fill your brain. Before bedtime, create a small break from stress and noise. Instead of going to bed worrying about money, take this quiet time to focus on the next biggest problem you need to tackle and let your brain work on it while you sleep. Solutions will surprise you!
8) Take Inventory
Go through linen cabinets, bathroom storage, and your pantry. Many of us stock up each time we find something on sale and suddenly find we have 12 cans of tuna or 8 bottles of lotion. With a detailed inventory, you can meal plan and shop with intention, only spending what you must.
Knowing what you have is critical to understanding where to put your next dollar. If you decide to sell your house rather than risk foreclosure, don’t try to do it alone. Track your successes so you can stay on task towards your goals.