If one of your goals in the New Year is to take control of your finances and become more financially stable, you're not alone. The average US household owes $16,000 in credit card debt, $50,000 in student loan debt, and $182,000 in mortgages.
Financial burdens can put a strain on relationships and cause
unwanted stress at home and at work, causing productivity
to decrease and stress-related health issues to increase.
Managing your debt and becoming debt-free doesn't have to be a "pie in the sky" dream. It is possible, but it requires a steady plan and vision for how you want to live your life.
First, you should
get a clear picture of your current financial situation
. Grab a notebook at the beginning of the month and list everything you spend - from your mortgage or rent to your morning cup of coffee. Once you see how you're spending your money, you'll be able to immediately cut out those random, unnecessary expenses.
Pro Tip: Know what your current credit score is.
Second, create a simple budget. Try the
Fifty percent of your monthly income should be allocated for fixed costs such as rent, utilities, and car payments. Twenty percent of your monthly income should be allocated
to financial goals and investments, such as paying down debt or increasing your savings. The final 30 percent of your monthly income can be allocated for flexible spending. This is the amount of money you have for food, entertainment, gas and hobbies. Remember, you can customize this to
fit your needs. This may mean that the flexible portion of your budget might start out as just 10 or 20 percent of your monthly income.
Third, find ways to
supplement your budget with additional
. If you have extra time in your day, consider driving for Uber or Lyft or maybe becoming a secret shopper for restaurants and retail spaces. Do some early spring cleaning and sell unused items on eBay or Craigslist. You can also negotiate your interest rates for your various loans, sometimes saving significantly on the amount you owe.