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:
- What insurance do you really need?
- Are you over or under insured?
- A walk through to help you do a price check on car insurance and home insurance.
- Set up a reminder to price check every 1 to 2 years to save on costs.
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:
- When and how to refinance?
- What to do with the extra money (pay off debt, build savings, etc.)?
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.
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.
Prepare for Emergencies
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).
Improve Your Credit and Pay Off Debt
It is important to have a good credit for financing big purchases and saving money on interest cost. In this article, we will explore:
- How to get free credit reports and scores.
- Pay for credit reporting.
- How to dispute incorrect information on your credit report.
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.
Save and Invest
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.
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:
- 401k, IRA, and non-retirement investing.
- Finding the right broker.
- Taking advantage of company match and tax break.
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:
- Start small, but start.
- The math behind what you need to retire, how simple it is.
- The importance of starting now.
More Ideas to Improve Your Finances
Bill payments is another aspect of your finance that is good to automate. By automating your bill payments, you can:
- Avoid late fees.
- Avoid interest charges.
- Simplify your life by not having to track everything.
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.
- Sell the crap you don’t use
- It is a fast way to save up an emergency fund
13. Earn More Money
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:
- Getting a raise.
- Getting a new job.
- Starting a side business.
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:
- Re-balancing your portfolio – will help you avoid disasters and keep portfolio growing
- Tax planning, e.g., tax-loss harvesting
- Reassessing your insurance coverage
- Other annual events
15. Avoid Big Fails
Lastly, we will touch on various pitfalls that you must avoid and how you can protect yourself from falling into these traps.
Pinyo is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.