Finance

7 Ways to Get Out of a Financial Bind

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Are you feeling a bit of a financial pinch? You’re not alone. According to research collected by Bankrate, the average American owes more than $5,000 in credit card debt. And that’s not counting other types of debt, like student loans, personal loans, and lines of credit. True, some debt can be beneficial. Having a car loan to earn a living makes sense, as long as the loan doesn’t strap you. However, many people have more debt than they can carry or a paltry bank account from unexpected emergencies.

You can climb out no matter why you’re in a fiscal rut. And the faster you take steps toward becoming a more successful money manager, the better. Try these strategies if you’re not satisfied with your cash situation now. They’ll help you reduce your financial insecurities and get you on the right economic track.

like a debit card. That way, all your purchases can be seen in one bank or card issuer statement. Look over your list for the “little things” that add up. Morning lattes and scones for $8. Candy binges at the gas station at $5 a pop. Occasional fast-food visits totaling $10 apiece. Calculate how much you could save if you reduce these non-essential purchases. You might be surprised at the number. Then, aim to make fewer impulse buys the next month. Over time, you’ll get ahead of your spending because you’ve increased your awareness.

2. Set up a household budget.

You might not think you need a household budget, especially living alone. Nonetheless, you’ll want to pull one together to help get a handle on your finances. Your budget should include both fixed-cost and variable-cost items. For instance, rent would be fixed because it’s about the same each month. An electricity bill is more of a variable cost since it goes down the less electricity you use.

Remember to add budget lines for savings and unexpected items. You will also want to put aside money every month to pay off the debt you owe. Try to be as thorough as you can with your budget. When you’re finished, you’ll have a good snapshot of how much you need. If you have other family members living with you, ensure they’re part of this project, too.

Financial Bind

3. Pay down your debt.

Are your credit cards maxed out or nearly at the borrowing limit? Resist the temptation of calling your card company for a credit increase. Instead, strive to pay down your debt as quickly as possible. This is where your budget will be handy because you’ll know how much you have left monthly.

Start by paying down your credit cards with the highest interest rates first. This allows you to avoid overpaying interest fees, which can add up. If possible, pare down the balance on your credit card by paying more than the minimal amount. Adding another $25 to your monthly payment means paying $300 more yearly to eliminate debt.

4. Cut out unnecessary spending.

Most people can scale back on their spending without feeling too much of a pinch. How could you subtly—or radically—lower your cash outlays? Begin with subscription plans for services you barely (or never) use. Cancel them immediately, and you’ll already be saving money without doing any heavy lifting.

Other ways to curb spending might be to combine car trips to conserve fuel or become a one-car family. You might be shocked at how many places you can trim financial fat. Some people like to cut the cable for a while. Others decide that eating out makes less sense than cooking homemade meals. Every dollar saved can be stored away for a rainy day or spent toward making debt disappear.

5. Buy new items only when necessary.

Maybe you want to purchase new furniture for your living room. Lucky you: It’s on sale and marked down from $1,500 to $1,200. So it’s worth saving $300 to get a matching sofa, loveseat, and comfy chair, right? Probably not, particularly if you’re in a financial bind. Here’s the truth: You won’t be saving $300 at all. You’ll be spending $1,200 for something you don’t need.

You must be careful with your buying behaviors when trying to get in the fiscal clear. It would help if you exercised self-discipline unless you need something, such as a replacement refrigerator. Consider that your goal is to eliminate economic stress, not to compound it.

6. Say “no” if someone asks you to cosign a loan.

Even though you’re experiencing a financial hiccup, you may still have a good (or better) credit score. This may make you a target for family members and friends who need cosigners for loans or leases. I don’t agree to cosign anything, though. It can be tough to tell someone you care about that you can’t help them right now. You could make matters worse for yourself if they withdraw their agreed-upon commitment. However, by getting free from debts, you’ll position yourself to help others later.

pre-owned goods online. Get creative because a hustle could improve your economic standing by bringing in more income.

The best part about a side job is that you don’t have to do it forever. On the other hand, it could turn into something bigger. Who knows? Perhaps your side gig will be the springboard to a career you never saw coming. Whether you’re ready for it or not, tomorrow will come. Addressing today’s fiscal obstacles makes “Future You” happier (and more relaxed).

Aly Jones
Twitter evangelist. Web fanatic. Lifelong travel nerd. Passionate zombie scholar. Extreme coffee fan. Amateur entrepreneur. Avid beer lover. Had moderate success lecturing about wieners in the UK. Won several awards for short selling clip-on ties in Hanford, CA. Uniquely-equipped for creating marketing channels for cod in Bethesda, MD. Spent a weekend buying and selling Easter candy in Phoenix, AZ. Was quite successful at analyzing tar in the government sector. Have a strong interest in getting to know barbie dolls for fun and profit.