Whew! Christmas is over, things went off without a hitch, the kids are happy with their presents and there you sit with a pile of receipts and credit card bills that could sink the Titanic. Ok, maybe it would only sink the S. S. Mino, but it certainly feels like the Titanic. Don’t let your mounting debt paralyze your financial mindset as you plan for 2018. Time to put together a plan of attack and work that plan. Here are a few tips to help you overcome your initial anxiety as you start planning the family budget for the months ahead. You can do it, you just need a plan. Follow the 5 tips below and save your family from repeat servings of Ramen noodles in the coming months.
1. Take stock: Now that Christmas is over, there will still be birthdays, showers, or special events coming up that you will need gifts for. This is the time for re-gifting. That great candle you got from Aunt Lucy or that bath set you got from Cousin Steve could be the next gift you give to a friend. Re-gifting of nice, unopened gifts is a common practice and allows you to skip the hassle of returning. Take all the gifts you will not use and place in a box marked “gifts” in your closet and pull them out as needed. This will save you shopping time when such unexpected events comes up and will also save you money to use for necessities and bills.
2. Cut up Store Rewards Cards: That department store card you signed up for only to get the extra 10% off your purchase; will only keep you shopping there if you keep it in your wallet. If there are no additional discounts with these store rewards cards you should cut them up now so you are not tempted to use them again in the future. This will also help you to manage your cash flow and keep track of how much you owe on your main credit cards. Having too many store rewards credit cards can lower your credit score and make getting additional credit in the future more difficult. Cut them up now before they become a problem.
3. Manage Current Credit Cards: If you haven’t bought into the computer money management programs, then now may be the time. There are many great programs out there that will allow you to set up separate accounts for each banking or credit account you have. I recommend Quicken Personal Finance or Money from Microsoft. Once you have set up all your accounts you should set up a schedule to enter your receipts into the program to help you keep track of what you have spent, what days the bills are due, and how much you owe on each bill. This will help you take a look at your spending habits and manage your money better.
4. Pay More: Paying the minimum amount on your credit card will allow you more cash on hand, but the additional interest you pay is essentially money for nothing. Paying additional amounts over the minimum due will help you reduce your debt faster and reduce the money you are wasting on interest. If at all possible, pay off credit card balances before the end of the month so that no finance charges will accrue.
5. Understand your situation: Once you have taken stock, cut up unused credit cards, and started managing your accounts you can determine where you are in your financial planning. If you find after a couple of months that you are repeatedly overspending your assets then it may be time to seek some outside help. There are many debt counseling companies that can help you lower your credit card interest rates, or combine monthly payments to lower your monthly bills. Most companies will even provide ideas on how to spend less and manage your dollars wisely.
Managing your money should be looked at like any other part of your life, as necessary as doing laundry or eating, and should be taken care of on a daily or weekly schedule. You wouldn’t let those stained clothes or dirty dishes sit around for a month before you attended to them, and you shouldn’t let your finances slip either.
As with any skill you have learned in life, there is always room for improvement. Reading money management websites, books, or magazines will only help you to understand the process better and thereby help you reduce your debt and increase your wealth. The sooner your start the sooner you will be on you way to a brighter financial future and a more stable life. Get started today! Give us a call if you need more ideas on how to budget and clear up all that new debt. Cheers to a great 2018!