The following 15-part series is a do-it-yourself step-by-step guide that will help you improve your finances, reduce your debt, and increase your income and savings. These steps start off with tips and ideas to help you cut your expenses. This will help you quickly improve your monthly cash flow and prepare you to tackle the subsequent steps that includes preparing for emergencies, improving your credit and paying off debt, and saving and investing. We will also leave you with a few more ideas to improve your finances even more and share a few pitfalls to avoid.
Photo via Wikimedia Commons.
We are going to start off with a few big wins (which may not be applicable to everyone) and then work our way toward smaller expense reduction ideas that almost everyone can take advantage of.
First we are going to start off with one of the best ways to cut a big chunk out of your expenses quickly. Finding a lower cost alternative for your current insurance policies is one of the quickest way to save several hundreds (perhaps even a thousand or more) dollars per year. In this article, we will explore:
Read: Pay Less for Your Insurance Coverage
If you are a homeowner, this is another good way to cut a sizable amount from your monthly mortgage payment and save a bunch of money that would otherwise go toward interest payments. In this article, we will explore:
Read: Refinance Your Home Loan
One of the most powerful methods is to cut recurring expenses. We covered two of the bigger expenses in the first two articles of this series. Are there any other recurring expenses that you could cut? Cable subscription, cell plan, gym membership, eating out, expensive hobbies, etc.
Read: Cut Recurring Expenses to Save Over and Over Again
Once you have your expenses under control, you can help your finances stay in shape by budgeting. In this article, we will explore Why a budget, spending plan, whatever you want to call it is important.
Read: Budgeting: When You Track It, You Get Better at It
Now that you saved a bunch of money by trimming your expenses, you should be seeing some “extra” money in your monthly budget. What should you do with it? Emergency fund is the foundation that stabilizes your finances even when you don’t realize it (real impact comes when you need, and have, emergency money).
Read: Save Up an Emergency Fund
It is important to have a good credit for financing big purchases and saving money on interest cost. In this article, we will explore:
Read: Track and Improve Your Credit
Remember all the extra money you saved by following the suggestions in the first three article? Now you can attack your debts with a vengeance. There are multiple methods, such as smallest balance first and highest interest rate first methods, but it doesn’t matter as long as you do it. We will also check out a few tools that can help you pay off your debt faster.
Read: Reduce Your Debt: Debt Snowball vs. Highest Interest Method
Although banks do not pay the high interest rates they used to, you can still find good banks that pay 8-10 times the national average! More importantly, a good bank can save you hundreds of dollars per year in bank fees. Choosing the right bank is an important foundation for your finances that allows you to worry less about your bank and spend more time on more important stuff.
Read: Find a Better Bank: Higher Interest and Less Fees
More than ever, your chance of achieving a comfortable retirement rests in your hands. You can no longer count on perks like pension plan and other company funded retirement benefits. Social Security looks like a failing system that you may out live. So what’s left? Investing can help you achieve your retirement goals. In this article, we will explore:
Read: Getting Started with Retirement Investing
Once you have the basics set up, it’s time to build in some automatic discipline so that your nest egg can grow on its own. In this article, we will explore:
Read: Automate Your Investments and Savings
Bill payments is another aspect of your finance that is good to automate. By automating your bill payments, you can:
Read: Paying Your Bills Automatically
Keep it simple is the mantra to a happier life and better finances. If you can live your life with less stuff, you will be less inundated by the resulting clutter and save a lot of money in the process. If you are already living with a lot of “stuff”, you can make the change and make some money in the process.
Read: Cut Crap You Don’t Use and Sell Your Stuff
You can only cut your costs back so much, at some point you need to earn more money. In this article, we will explore a few ways to make more money, such as:
Read: Earn More Money to Transform Your Finances.
Once you’ve built up the foundation for your finances, there are things that you must do going forward to maintain what you have built and keep it going. In this article, we will explore:
Read: 20 Important Financial Tasks To Do Each Year.
Lastly, we will touch on various pitfalls that you must avoid and how you can protect yourself from falling into these traps.
Read: 21 Money Mistakes and Problems to Avoid
Looking forward to the guide coming out. Sounds like a lot of good advice. We have recently paid off our house so I’m putting that money in an emergency fund every month. We don’t miss it since it was going out anyway and it sure is nice to see the account growing so quickly.
What a great check list. Thanks for sharing!
As a professional writer / blogger I started wanting to cut debt and succeeded after a lot of hard work, but now with systems and technology in place it is really something that’s totally achievable. Online income sources and cutting debt can go hand-in-hand towards a much brighter future, even in a dark economy. Great advice, thank you.
When you pay less for health insurance, don’t you usually have a higher deductible?
Excellent list. Do you think increasing debt can be a good move for creating long term wealth? For example, step 9 (investing) would be easier if step 7 (reducing debt) were skipped.
I still hold strong to the idea that most people need to pay down their credit card balances more consistently just prior to the end of their grace periods each month. By letting balances carry over from month-to-month (revolve) the interest not only makes these credit card companies richer but it compounds on the debt issue until it gets so out of hand that it can never be paid back in a life time. Better to attack it as it builds.
The better way of not getting into a debt is to manage your expences correctly. We need to start learning about money and its influence probably at the age of 13 ( I am not kidding by the way). Coz this is the time when we take our baby steps into adult world. So we need to have a better understanding of major terms in a finance sphere : debt, credit, money, invest, spend , etc
very nice list. Its true that if you start tracking what you spend, you can end up saving a lot of money instead of buying blindly
I almost bought a $2 PDF on personal finance guide and tips but i paused for a minute and thought to myself “wait,…i can get free tips on my favorite blogs..”. There, i saved myself from spending unnecessary spending. Its just great to realize that we can get very helpful tips and advice from finance experts for FREE. You are one of the most respected contributor on the web that i have known. Thanks once again. More power to your career.
@Malcolm – “You are one of the most respected contributor on the web that i have known.”, thank you. my team and I really appreciate the compliment.
People always focus on the ‘spending less’ portion of this equation online – but I can guarantee that none of them are actively looking for work if they have a job.
Even if you’re happy where you are – always keep your ear to the ground. You might find something that pays better and you can use this as leverage to get a raise at your existing job if you don’t want to leave.
This is a great list. I need to sell a lot of my stuff, and soon. I don’t even know how it all collected; it’s not like I went out and bought 90% of it. I hope that I can make some money! Do you have any garage sale tips? I’ve never had one before.
I think the big one is going into business for yourself. That way, you reap all the benefits of your own hard work, not some corporate politician all the way up there.
I have learned from great personal finance advisers that it doesn’t matter how much you earn, but how much you keep is important.
Very true as you said, we should cut our expensive as much as possible and stick to our budget, if we want to survive financially.
Thanks for great tips.