Most advice regarding improving financial wellness concentrates on knowing your financial state as the first step. As important as it is, it is also important for you to know where you want to be as, otherwise, you will never know whether your strategies worked or not. Some steps you can take right now to be able to make a meaningful difference to your financial health and create the desired momentum so that you can sustain it.
Reduce Your Expenses to Match Your Income
If your credit card dues have been mounting steadily and you are finding it impossible to pay even the minimum dues, you need to track your spending and find out where your money has been going. Put all the items down, including non-monthly expenses like vacations, on a spreadsheet after analyzing your credit card statements. Heads on which you are spending more should be first targeted for trimming so that you can restrict your spending to below what you are earning.
Ensure Adequate Protection
If you have been missing your credit card payments, your credit score will have taken a hit. You need to get your credit report from all three credit bureaus and to find out your credit score and check them for inaccuracies that you should report for immediate rectification. Stop using your credit cards and try to pay off the statement balances at the soonest so that your credit score improves. Start saving to build an emergency fund of at least three to six months of your monthly expenses and purchase health, disability, long-term care, and life insurance to safeguard yourself and your family.
Tackle High-Interest Debt Urgently
Since credit card interest rates are generally prohibitive, paying only the minimum balance every month can be expensive. See if you can find a zero percent balance transfer offer for a reasonably long period that you can use to transfer the other card balances and wind down the debt. You must, however, make sure that you pay off the entire balance before the offer period expires, because, otherwise, you may be charged deferred interest on the full amount, according to https://www.forbes.com. If a balance transfer offer is not available, you can investigate the possibility of taking out a debt consolidation loan at a lower rate of interest, and pay off your credit cards.
Catch Up on Retirement Funding
After you have tackled the emergency issues, you need to turn your attention to planning for retirement. While ideally, you should be saving at least 20% of your income for retirement, to begin with, you should contribute enough to max the employer’s match to prevent not using free money. Use a retirement calculator to figure out how much you need to allocate to the retirement funds. If you are unable to allocate enough money, try to increase the contributions over time.
For someone who has been spending in a carefree manner and has been besieged by a mountain of debt, taking all these steps may seem overwhelming. Indeed, achieving financial wellness can be a struggle; however, the sooner you recognize the need for correction, the faster you will be able to achieve your financial goals. Also, you can apply Gary Saitowitz Grant to gain finical relief.