The world economy is still struggling to recover from the shattering effect of the recent financial depression. Unemployment rates and the dragon of inflation are still widely out of control. Quite naturally, millions of people are struggling to survive in this economically turbulent weather. Under the circumstance it is rather too easy for people to fall in debt. Being in debt can force you to consider debt relief options or payday loans. While most debt relief programs can seriously damage your credit, the high interest payday loans can push you towards payday loan settlement.
It is possible to avoid such a scary situation if you are a little cautious with your money and develop a proper strategy. Here are a few rules you must follow if you want to stay afloat during recession:
1) Know Your Financial Goals
To allocate your money properly, you should know what you want from life. Considering the present state of the world economy, it is wise to set goals according to your needs rather than wants. There are some important questions that you must ask yourself. Do you want to buy a new house? Would you like to retire early? Do you have plans for your Children’s higher education? Make your plans, save money and invest accordingly. Also, prioritize your goals. Start a daily planner and work towards your priorities according to their importance.
2) Budget, Budget, Budget
You hate budgets. In fact, everyone hates budgets. However, you do need to start a budget in case you have any intention of having control over your finances. A budget would help you to know your total monthly expenses, whether your payments exceed your monthly income etc. You would get organized and find new ways to save money. Make sure that you don’t spend outside the budget. You can consider using free e-budgeting tools like Mint if you are serious about budgeting. With this software, you can budget on a much bigger scale.
3) Minimum Use of Credit Cards
No one can deny that credit cards have changed the world, for good or for worse, forever. Credit cards help you to buy at will and build credit score but they also ruin you by tempting you to spend more. Are you aware that credit cards are the biggest reason behind consumer debt? Use a single credit card and that too wisely. Particularly remember that it is a bad idea to purchase your everyday necessities with credit cards. If possible, then do away with credit cards altogether and opt for debit cards. By doing so, you won’t be able to spend beyond your means.
4) A Rainy Day Fund
Your life is running smoothly at the moment and you are a happy man. What happens if you lose your job tomorrow? Are you ready for an unexpected and huge medical bill? What about a big car repair bill? A decent emergency fund can save your day in such a situation. Remember that life is what happens to you while you are making other plans. Therefore, start contributing for an emergency fund today. Contribute according to your convenience and make sure that you do not spend that money for trivial reasons.
5) Timely Payment of Bills
It all starts from here. You start paying late, rack up penalties and late fees and ultimately you are not in a position to make any payments at all. So keep aside money for the payments at the beginning of the month. Do not touch that money for the sake of watching movies or eating out at expensive venues. Also remember that making late payments will seriously hurt your credit score.
6) Stay Clear of Anymore Loans if You Are Already in Debt
If you are already drowning in debt or even have a manageable amount of debt then resorting further loans will only make your situation worse. Many people make the mistake of opting for payday loans to pay off their existing debts. This can be disastrous because if you default on payday loans then you will sink further in debt and may even be forced to consider bankruptcy. So if you have existing debts then focus on clearing it instead of taking new loans.
Managing personal finance can be fun and you can enjoy it. But things can turn sour if you make wrong moves. So remember the above tips and start moving towards a financially secure future.
About the Author:
Myrina Stein is a regular writer for various finance related communities including Oak View Law Group and CDFA. She is a post graduate degree holder in finance from a reputed University in California and currently working in a finance consultancy as an Equity Project Manager.