It’s common to want to look the other way when we’re faced with
dealing with our finances. It’s not a very exciting task for most
people. And some people are outright scared to look at their finances,
afraid they’ll discover a mess. But today I want to challenge you to
dive right in there and make some progress. To give you a bit of
guidance and to lessen the stress of this challenge, I’ve provided some
steps you can take today that will quickly help to improve your
finances.
Here are the Top 10 Ways to Improve Your Bottom Line:
1. Discover Your Personal Net Worth: Major
corporations are judged by their financial ratios. One of the most
important is their net worth (assets minus debts). Take a moment to
calculate your own net worth. Subtract all your debts (mortgage, credit
cards, car loan) from your assets (home value, cash, savings, car
value). Hopefully you’ll discover a positive number. Search online for
average net worth by age listings to compare your net worth to others.
This exercise will give you a good understanding of your financial
situation, and will hopefully motivate you to increase your net worth.
2.Stop Paying for the Stuff You Don’t Need: A big
factor in your personal net worth is your ability to spend less than you
earn. To decrease the amount you spend, I recommend you first take a
look at your monthly expenses and see if there is anything there you
don’t use. Find one or two items that you can eliminate. When I did this
exercise for the first time, the first thing to go was my home phone
line. Wasn’t using it. Didn’t need it.
3. Pay Less for the Things You Want Now take the
rest of your expenses and see if there is a way you can pay less for
them. Obviously you can’t instantly lower your mortgage. But you could
possibly lower things like insurance and cable TV simply by calling and
asking. Other expenses, like food can be lowered by using coupons and
asking more for discounts.
4. Create a Simple, Better Budget Instead of
building out a big budget on all your expenses. Simply take 3 or 4
spending categories that you have the most flexibility with (e.g. dining
out expense), and set a budget amount for the month. You’ll only need
to worry about tracking these 3 or 4 categories, and can focus your
energies where it matters most.
5. Earn More with Your Savings High yield online savings accounts
are now paying interest up to 6 times the national average on regular
savings accounts. It’s quick to open up an account with one of these
banks. The funds are FDIC insured and usually come with no fees or
minimums. If you’ve got $1,000 or more lying around in a normal savings
account, it’s time to get with the times and move those funds to a place
where you can earn a bit of money with your savings. At a minimum
you’ll be able to keep up with inflation.
6. Fix Credit Report Errors Visit
annualcreditreport.com (the only place to get your truly free credit
report) and view your credit reports from the three bureaus. Make note
of all the errors on the reports. If you find some major errors (debts
that aren’t yours, late payments you didn’t know about, etc.) call up
the bureau and find out how to get the error fixed. Doing so will likely
help to improve your credit score. Which in turn will help you to get
better rates on insurance and loan rates.
7. Lower Your Interest Rates If you have high
interest credit card debt, call up your credit card company and request
that your rate be lowered. Have a competitors rate handy to negotiate.
This trick can literally save you hundreds if you have a lot of debt.
And all it takes is a phone call.
8. Open a Roth IRA If you haven’t started saving for
your retirement, or you want something to supplement what your doing
with your company 401k, the Roth IRA is the perfect fit. Earnings from
the funds invested in your Roth IRA can be withdrawn in retirement tax
free. It’s easy to open a Roth IRA too. You can open one quickly at a bank, a mutual fund company, or with one of the online discount brokers.
9. Get a Quote on Life Insurance Lastly, if someone
else depends on your income, you should strongly consider life
insurance. For most people this is the last area of focus regarding
their finances. But it’s a very important area. I’m not going to pretend
you could get insurance in a day. It’s a long, drawn-out process. But
you could get a quote and get the process started today.
Hopefully this gives you some good ideas and you’re encouraged to get started improving your finances. Do something today!
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