Life loves throwing curveballs at people, and it isn’t going to stop anytime soon. You never know when a financial crisis could hit you, and if you’ve got a family that’s even more true. See now it’s not just your own problems that could hit your wallet, any of them having issues could do the same thing.
If the worst does happen though, or if you’re starting from a point of bad credit and just woke up to the benefits of fixing that, here are 5 great steps to get your family back in the black.
Stop the Bleeding!
This means you have got to stop all the outgoings which are causing your problems. Figure out your payments/debts and sort out a plan to get rid of them. If you can pay some off, do that. If there are a lot of high interest payments going, consolidation might be a good option. You could get a loan from somewhere like www.kingofkash.com to help keep your overall payments smaller.
Live Within Your Means
Now that you’ve got the expenses figured out, it’s time to trim them down. You want as big a gap as possible between your income and expenses. Doing this gives you maximum cash to pay down debts, which reduces your payments in the future.
Lowering your costs means trying to lower bill costs, perhaps downsizing your home if that’s an option, as it could reduce your rent/mortgage payments. There’s also plenty of ways to reduce expenses for things like groceries, travel and clothing.
Cut Un-Needed Expenses Completely
This covers things like nights out, vacations and luxury items. You really have to evaluate what’s important at a time like this. There’s plenty of time in the future to have fun, and sometimes it only takes a small sacrifice to free up a chunk of cash.
If you eat out once a week for example, you could probably save $100 a month just by staying home instead! Coffee is another thing some people spend a large amount on without realizing it.
Pay Off Your Debts
The key to being financially free is not owing any money. This also gives you the option to use your money wisely, and create more income from it.
Start off with the highest interest rate payments, rather than the highest cash payments. This way you get rid of the debt which is costing you the most money over time. After that you can start moving through the rest.
Refinancing is basically borrowing money from A to pay off your debt with B. So now you owe the money to A instead. Why would this be a good thing?
Well sometimes B might be charging you 15% interest already. Paying off the lump sum early gives a discount on the total paid back. On the other side, A is willing to loan you this lump sum at 9% interest, because your credit has been improving. This way you actually pay back less overall!