Financial Peace – 9 Ways to Get You Back In The Black
- February 26, 2020
- 4 min read
- 31 reads
Are you like most Americans – in debt? Are you anxious about your financial future? Do you wonder how you can gain financial peace? You’re not alone. Many people are searching for ways to climb out of the red into the black. To claim back their financial future.
Our country is in more household debt than ever before.
Total consumer debt peaked at $14.15 trillion in the 4th quarter, 2019! This is the highest it has been in the history of our nation.
Credit card debt has reduced slightly throughout the country.
New lenders offering lower interest rates is a factor that needs to be taking into consideration as to the reason for the reduction. People are sick of paying high interests rate when they don’t need to.
The student loan debt, on the other hand, has soared.
It now accounts for 6% of all consumer debt or $849 billion across the nation. Gulp!
This does indicate that more Americans are gaining a higher education, which is a positive.
On the flip side, high student debt loads and interest payments strangle the opportunities that students have worked so hard to gain.
So, where do you fit into all of this?
Are you looking for ways to gain financial peace? Do you find yourself anxious and stressed out month after month as the bills pile up?
Gaining financial peace is possible.
It’s not an overnight quick fix. But with some organization, hard-work, determination, and self-control, it is achievable.
We have put together a beginner’s guide to regaining your financial peace.
1. Get real
Make a list of all outstanding debt in your household. It is going to feel similar to when you stand on the scales the day after thanksgiving. Uncomfortable. But push through.
It is vital to know exactly where your family is at to make the changes needed to get ahead.
Make an excel sheet with the type of debt, interest payments, key loan terms. This allows you to analyze which debts have the highest interest rates and the debts that you may be able to consolidate.
2. Consolidate all high-interest loans
If your loan term allows, then consolidate your high-interest loans.
A good way to do this is through a revolving line of credit or through a personal loan check out our loan calculator. This tool is entirely free and allows you to compare loans from many different lenders at once.
3. Cut up the cards
Once consolidated, have one credit card and reduce the card limit.
This will be used only for initial emergencies until you get enough money in an emergency fund.
4. Write a realistic budget
We use the word realistic because so many people write a budget that is not obtainable.
Not allowing yourself to get a hair-cut or a coffee for the next year is unreasonable. Many people fail on a stringent budget because life happens, and we need a few of the simple life’s pleasures.
The best way to write a budget is to work out what your needed living expenses are first. After that, decide on a small amount per month that you can choose to spend on things that matter to you. Everything else goes into saving and paying off debt!
5. Emergency fund
Once you know how much you can set aside for saving and paying off debt. Place 50% of the amount into a savings account.
Set up an automatic monthly payment into an account you cannot touch easily. This is your emergency fund.
You cannot access this fund for any other reason other than a legitimate emergency.
This is a vital part of creating financial peace. Knowing you have savings set aside if the worst were to happen will reduce anxiety around your financial future.
Once you have saved the equivalent of one month’s household budget, reduce the payment amount to 25%. The other 25% will now get added to the other 50% to pay off your debt faster.
Continue adding to this account until you have three months’ worth of your household budget saved.
6. Pay off your debt
With the other 50% pay off, you’re your debt. You can choose the smallest debt amount to pay off first. If you have been able to consolidate your debt, pay off the debt with the highest interest first.
Once your emergency fund has reached one month’s household budget, the other 25% goes directly into paying off your debt as well.
7. Sell stuff
A fast way to knock back debt is to go through your home, shed, storage, attic, and basement to find anything of value to sell.
The average American household has over 300,000 household items in it! No one can use that many things.
Go through everything you do not use and sell it on Craigslist or a community Facebook page.
Garage sales are a last resort for smaller low-value items. You will often sell goods for more online.
8. Increase your income
Paying off your debt won’t last forever. Consider increasing your household income.
Can you get more hours at work? Can you apply for another job that pays more?
Often people stay in a job because it is comfortable and convenient, but moving jobs can be financially beneficial.
The current employment rate is increasing, so finding another job could be more accessible than ever before.
There are many ways you could increase your income and get money now.
Every little bit helps!
9. Keep the goal in mind
Every time you find it hard to say no to that new pair of shoes or dinner out with friends, remind yourself of how it will feel to have financial peace. Keep that your focus rather than what you are missing out. It’s only for a season.
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