Managing household finances can sometimes seem overwhelming, especially if you have never been taught how. The following tips are designed to help you take charge of your finances, lower your overall monthly expenses and save for the future.
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Look at Your Biggest Bills First
Start with the bills that hit your account balances the hardest each month. For most households, this is a mortgage or rent payment. While you can’t eliminate housing costs, you can take steps to get them under control, even in a hot market.
If you rent, talk to your landlord about lowering your monthly costs. You might also consider taking in a roommate, moving to smaller accommodations, or even relocating to a less expensive area of town.
Many of these rules are also happy mortgages. However, instead of cheaper rent, you may be able to get a better interest rate that lowers your monthly mortgage amount. Look into special programs designed to help, such as a USDA streamline refinance loan.
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Negotiate Rates With Service Providers
Next, move on to your smaller monthly bills, like internet, cell phones and streaming services. Research alternative providers and their rates. If you don’t want to switch, you could always call your current provider and ask them to match a competitor’s price or put you into a new promotional category. Doing this with each company can save you hundreds of dollars each month, and you won’t miss out on any of the amenities you enjoy.
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Develop a Realistic Budget
Sadly, many Americans grow up without any education in managing household finances. This often results in haphazard — and sometimes reckless — spending that can spiral out of control. A realistic budget is one of the most effective ways to combat the problem.
Start by tracking all of your spending for a set period, such as a month. Keep records of every penny you spend, even if it seems insignificant. Those quick stops for a soda or cup of coffee add up quicker than you realize. Then, get all of your financial statements for an entire year. Make a note of anything you pay for quarterly or annually and determine the monthly cost. Do the same thing with your income.
Use this information to build a budget of only the essentials. Then, add extras as you have the funds. For example, now you know how many times you can stop for takeout on the way home or if you should look into meal prepping for the week instead.
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Check Your Credit Report
You should be checking your credit report at least once a year or more often if you have concerns about it. Request a free copy today and check it for errors. If you notice anything unusual, contact the agency and ask for an explanation or for a false entry to be removed. Be prepared to show proof of your claims.
Everyone is entitled to a free annual copy of their credit report from each major credit bureau. If you plan ahead, you can check one form for each company every few months to keep an eye on your report and correct any errors as they come up.
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Pay Down Your Debts
If you have debts that you have been chipping away at, now is a great time to double down on your efforts. Leave extra room in your budget to devote to this goal. The money you save on interest will more than make up for it.
There are two popular debt reduction strategies, called debt avalanche and snowball. There are a few differences between the two, but they both work by focusing extra effort on one balance at a time. Check them out and see if one could work for you.
You have the power to take charge of your finances, and it isn’t that difficult once you get started. Some steps that may help are building a budget, paying down debt, reducing housing costs and negotiating with service providers.