Be financially strong - Good money habits to get out of debt

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By: Sanders Patricia
on 15th Mar,2017

To become financially strong and repay your debts, you’ll have to develop some key money habits that will help you to achieve your goals. Here are some of the most pressing ones that you can ill-afford to ignore.

“The speed of your success is limited only by your dedication and what you're willing to sacrifice”

― Nathan W. Morris

Do you strive to be financially strong? Are you willing to get out of debt? If yes, then you’re at the right place at the right time. But, before we get any further into our serious talk, read the short story below.

A young student asked her teacher,"When is the most appropriate time to begin developing good habits?”
The teacher smilingly leaned forward on her student’s desk and inquired calmly, “What’s your age?”
“Eight years, Ma'am”, the girl replied. Quite intrigued.
Pat came the teacher’s reply,“Then you’ve just lost precious eight years to develop one."

The moral of the story is ‘the sooner you start developing good habits, the better off your life would be’. In this case, we’re discussing about good financial habits.

So, here are some good money habits that you can develop now to lead a financially prosperous life.

Habit 1 : Pay off your bills in advance

Let no outstanding bills stretch your paycheck. If you pay your bills late every time, then you need to reverse it by paying them off in advance. The reason behind doing so is that you’ll have an exact idea of the disposable cash you have in your hand to pay for your monthly living costs. As a result, you’ll gain more control over your finances and the stress of accumulating bills will gradually recede instead of haunting you throughout the month.

The key here is to gain control over your paycheck that would drive you to develop a sustainable financial habit.

Next month, don’t wait for the credit card bills to arrive at your doorstep. Rather, log in to your credit accounts and pay off your balances by the mid of the month.

You’ll not accrue any interest on your balances.

Habit 2 : Keep a watch over your expenses

If you don’t have a budget, then you probably don’t even have a remote idea where all of your money is going. This is one of those good financial habits you must adopt, if you want to gain control over your finances.

To pay off your debts and become financially strong, it’s essential to have a smart budget - the foundation of a healthy financial life.

If you want to plug your excessive expenses, you should track your expenses. Suppose, if your restaurant meals eat up 50% of your paycheck, cut that back to near about 20-25% or better, if you can cook yourself a meal most of the time. This way you’ll be able to free up a sizeable amount of cash to pay off your outstanding bills in larger amounts or increase your savings. Both ways you win.

Habit 3 : Never spend beyond your means

Covering your living cost within your income will serve as your budget’s foundation. Needless to say, all your financial planning would be useless, unless you’re willing to save a portion of your income every month.

You don’t have to be a Navy Seal who’s on a covert mission, with all sorts of strategic plans and reinforcements, rather you just have to contribute a definite percentage of your monthly income toward your retirement/savings account. Simple.

Take for instance, your take-home pay is $6500. You need to cover your living cost within $6000 and save $500. Growing your savings will improve your financial condition drastically.

Habit 4 : Borrowing to buy implies unaffordability to buy

Credit, undoubtedly, seems attractive. But, it’s a double-edged sword too.

Misuse credit and you’re in for dangerous financial quicksand. The more your impulsivity, the deeper you’ll sink. So, borrow judiciously.

When buying a home or car, borrowing is justified. However, if you’re borrowing and that too, at high rates of interest, to fulfill your unnecessary cravings, then it’s not.

One of the most rewarding financial habits would require you to remove factors that stretches your paycheck. Be careful with your credit cards. It’ll help you avoid incurring costly fresh balances and it’d serve as a gateway to get out of debt faster.

Habit 5 : Start your work early

When you start working earlier than before, you’ll not only boost your work performance, but also be a lot stress free. You may have to devote a bit of extra time to organize your day that would help you to complete your top priority tasks first. With better performance, you can outshine your competitors - your colleagues.

Working say, 10-20 minutes early every day, may become an integral part of your overall enhanced productivity as well as your visibility at your workplace. Gradually, you’d successfully qualify for a pay hike.

Hence, an increased income will help you to pay off debt faster and save more.

Habit 6 : Have well-defined saving goals.

Many people are aware of how important it is to create an emergency fund as well as contribute towards retirement accounts. However, most of them are ignorant of the importance of following a set of well-defined saving goals.

Such goals could be saving money to buy a car without a loan, pay for your children’s education, or to make a some major home improvements.

The whole idea of saving money for a definite set of goals, is to develop the habit of self-funding your needs or wants. It implies that you pay in cash for certain items, saved out of your monthly paycheck, instead of borrowing money like others.

It’s good to revise and re-analyze your financial goals every 90 days. With consistent effort, you could see your savings compound in leaps and bounds within a couple of years.

Habit 7 : Revitalize your emergency fund at regular intervals

There’s a lot of talk on the web about building an emergency fund, but far less about replenishing it once you’ve taken money out of it. And if your living expenses have increased over the years, you may find your emergency fund to be inadequate.

The web is pregnant will all the philosophies behind raising an emergency fund. Unfortunately, there’s hardly any talk about revitalizing your financial lifeline - your emergency fund.

Make sure to review your emergency fund at least once a year. Calculate to find out whether or not it is enough to cover 3-6 months of your living costs on the basis of your present lifestyle.

In case it isn't, then you’ll have to replenish it with the necessary amount of dollars.

The bottomline is: It is difficult to remain financially healthy without a well-oiled emergency fund.

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