You can choose to get out of debt no matter your age. You can choose to be wealthy no matter how close to retirement you are. You even can choose to start a financial game plan even if you didn’t have one before such as investing in a college fund even when your kid is in high school! But you have to choose that path and choose it right now.
Here are some choices you can make right now to change your life for the better and bring a little extra cash or pay off some debt. Just pick one — not all. I don’t do all of these, why should I expect you to do all of them? Pick one that you know that you can accomplish.
Pay all the bills on time….or get a big tax return?
If you are getting a big tax return, you are withholding too much money. I know why most people do it — because they cannot save money very well. I’ve been there! But in doing so I charged up the credit card every month. Sure I paid part of the credit card when I got the tax return, but I also paid interest — sometimes up to 14%! Plus I was giving the government a free loan on my money! If you get $12,000 back, think of what you could have done instead with $1,000 a month more. Less stress! Less credit cards! More bills will be paid on time!
Save money…or be unprepared for an emergency
Some of the largest financial advisors say to save up eight months of savings. I say: who has that much money? Even I do not have that much saved. But I know how important 1 to 3 months savings is. Have it in an investment that you can easily withdraw it if you need it for an emergency — like a savings accounts or money market account.
Create a budget….or live paycheck to paycheck for the rest of my life?
Believe me — living on a budget was the hardest thing for me to start. But when I finally did, I could see where I was overspending. I could see that my entire paycheck went to nothing — eating out, buying clothes I didn’t need, spending too much money on groceries, etc. Once I was on the budget it became easier and easier to keep it. Just three months on a budget can save you thousands! (See ratecatcher articles on budgeting).
Pay a little extra toward debt…..or be in debt for the rest of my life?
You get the bill every month and you pay it. But the credit card companies know that this is only the interest you are paying. Even if you don’t charge any more, you will never pay down the balance. Never. Now add a little more to next month’s bill. Add $50. That is a $50 bite that you are taking out of the $4,000 elephant that you owe. It is important that you don’t pay more than you can afford, or you will be in the same cycle again of charging the credit card because you don’t have enough money for living expenses.
Getting out of a bad financial cycle does not always require making drastic changes — just smart changes. Just like cutting one thing out of your diet (like soda) can cause you to lose weight, one small change to your financial diet can turn things around for you as well. It doesn’t matter which college savings plan is better — as long as you have a college savings plan. Anything is better than nothing! Today is the day for your financial future to begin.
