Personal finance can quickly get out of control. If you are in a bad situation with credit cards or student loan debts, following the advice and tips below can help you get back on a path of financial responsibility. Use this advice and apply it in your life today to avoid the stress that poor finances can bring.
1) Stick to your budget.
Create a budget each month for any necessities, making sure to prioritize things like bills for rent or electricity. After that, pay back any personal debts so your friends or family won't feel like you are taking their help for granted.
Make a budget for each item you need to work on, and make sure you stay within your financial boundaries. Borrowing between budget items is okay as long as you are able to spend less money in another category to balance it out. Keeping yourself to a strict budget will allow you to be more confident in your finances, and more importantly, not overspend on something you don't need.
2) Buy a house the right way.
If you are thinking about getting a mortgage, compare interest rates among lenders, as well as any other expenses. For instance, you can pay down points for your mortgage payments to become cheaper over time. Take in consideration how long you will live in your house to find the best type of mortgage.
Think about buying a multi-family home and renting out the other section(s). Most people do not know this, but you can still qualify for an FHA mortgage on multi unit properties. Having additional renters will help you pay down the balance (and build equity) faster. Equity turns into cash that you can use later in life.
3) When buying a car, choose a used car every time.
The first 10,000 miles on a car are the most expensive miles of your life. Let someone else drive the car off the lot and then you can take advantage of the price drop when you go to buy the car a couple years later.
Also, before even purchasing a new car, build up a "car fund". Try to pay cash for the gently used new car. Automobile loans are one of the biggest drains on your financial life.
4) Plan your meals for the week.
Make a list of the ingredients that you need for all meals. Bring your list with you when you shop, and check things off as you go. Use coupons. This will help ensure that you do not deviate from your plan, and buy too many "extras" that will break your budget and your waistline.
5) Never co-sign a loan for anyone!
No matter how much you think you can trust them, just don't do it. If you do, and "the friend" doesn't pay the bills, the debt will become your responsibility, and you will have to fork up the money each month.
6) Don't pay for new release books, CD's and DVD's.
Consider applying for a library card at your local public library. You can even borrow e-books now from libraries. Libraries are also a great source of free entertainment for families with young children.
7) Do not accept grace periods from your credit card company.
It seems like a great idea at first, but the problem is you get used to not paying your card balance each month. Paying your bills on time has to become a habit, and it's not a habit you want to get away from.
8) Filing bankruptcy should be your last resort.
First look into other things like debt consolidation before you attempt to throw your hands in the air and give up on paying altogether. There is a time and place for bankruptcy, but it means years of not having credit and higher interest rates on loans. Really think long and hard about it.
As you can see, these tips are easy to start with and highly applicable for anyone, no matter the situation. Learning how to control your personal finances can make or break you financially. If you have money or not, you need to follow practical, actionable advice so you can enjoy life without worrying about your personal finances all the time.