Regaining Financial Control
- Do you spend more than you earn?
- Are outstanding payments piling up or becoming increasingly hard to pay off?
- Do you find yourself paying bills late or barely making deadlines?
- Is your credit card limit fully utilized?
- Do you feel like you’re struggling to keep your head above the water?
Here are a few tips to avoid getting into that situation and to get you out if you’re already there.
How to regain control of your finances:
Consolidate your debt
Your financial situation could get very confusing when several different loan or credit card payments are coming out of your account at different times of the month. It becomes difficult to keep track of: which payments were actually made; which payments are outstanding and if you have sufficient funds to cover them; how much you can afford to spend on entertainment and other everyday needs such as groceries, travel, lunch etc.
You can solve this problem through debt consolidation. This simply entails taking out one loan to pay off many others including hire purchase debt and loans and credit cards from other banks and retailers. This way, you only have to service one loan, track one payment and deal with one bank.
Ask for a Debt Consolidation Loan.
There are times when mortgage or loan installments and high credit card balances can become burdensome. As soon as you start to feel overwhelmed, you should set up an aggressive plan to automatically reduce your debt. Commit to paying off one loan or your credit card entirely. By commit, we mean that you:
Do not go on a spending spree with those funds. Instead:
You will therefore pay off this next debt well before its maturity date. Continue using the funds that become available after paying off each debt in this way and you’re on the road to being debt free.
Don’t save in your salary account.
You need a basic savings or chequing account so your employer can deposit your salary through the bank. This is your main transaction account to buy lunch, pay bills, buy groceries and party so, ensure you get an ATM debit card and cheque book to easily access your funds. It is highly unlikely that you will meet your savings goals if you try to save in this account. You will probably spend money that you will need some time in the future and then, when that time comes and you don’t have the money set aside, you will find yourself frustrated and financially stressed. So, keep your spending account separate from savings.
Save for annual expensesYear after year, many of us find ourselves with the same financial problems. We know we have to pay house or car insurances and other annual expenses, yet we pretend otherwise until the due date arrives. We then use our credit cards or even seek financing to pay for these unavoidable expenses. You should list and calculate the total of these expenses, divide the total by 12 and save for them monthly so you will have the cash available when the time comes.
Save at least 3 month’s salary
In the event of loss of employment, a decision to change jobs, an international financial crisis or any emergency, you still need to pay bills, buy groceries and cover other unavoidable monthly expenses to keep your home running, provide for your children and simply live. Everyone (especially parents, homeowners and renters) should have an account with at least three to six months salary set aside. If you find it difficult to save three month’s salary, you should aim to cover at least three months of expected expenses (loans, rent, bills, etc.)
Automatic Savings Plan from your Salary; Account to high interest yielding savings account or a Loan for an amount equal to three month’s salary
Save for your major goals
People become very frustrated when they make a decision to achieve a major milestone but find that they are unable to do so because of lack of funding. If, for example, you’re planning to buy a car or a home, you probably need to have a down payment to qualify for the loan or mortgage. Decide on your next major life event, call us to find out the financial implications, and set up either an Automatic or Forced Savings Plan immediately so you’ll be prepared.
Look to the future and increase your earning potential
Your current salary may be sufficient to meet your needs now but will it be enough in the future?
- Will you have enough money to maintain your standard of living if you buy a home, have kids or buy a new car?
- Will it be enough to allow you to take that dream vacation or ensure that your mother receives the best care available as she grows older?
If you think you need a salary increase then you have to make yourself more professionally attractive to the job market and even to your current employer. This may require taking a short course or pursuing a degree. If so, there is a financial side to this and we encourage you to call us to discuss your options.
My cash control checklist