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12 Ways To Do Financial Spring Cleaning To Avoid Debt Burden

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Lyle Solomon has extensive legal experience, in-depth knowledge, and experience in consumer finance and writing. He has been a member of the California State Bar since 2003. He graduated from the University of the Pacific’s McGeorge School of Law in Sacramento, California, in 1998 and currently works for the Oak View Law Group in California as a principal attorney.

Are you worried about your huge debt load? If yes, you should start spring cleaning your financial house right now! Debts have become common in our lives, but if we get habituated to them, we’ll gradually find ourselves drowning in the debt burden. However, don’t panic; making wise financial moves can help you get out of debt and start a healthy financial journey this season. 

Remember, saving is a virtue. You can use your savings for various gainful purposes. Again, if you are in debt troubles, you can use your savings for debt reduction. Anyway, the earlier you can start this smart financial exercise, the better. Let’s understand how financial spring cleaning can help you eliminate your old debts.

1. Act According to your Budget

Plan a realistic budget. First, find the items on which you will have to make expenses. Then, allocate a budget for each of these items. Most importantly, stick to your budget. With a proper budget in place, you will have more control over your finances. This will help you save some money regularly. A proper budget is the cornerstone of building substantial wealth and securing a better future for you and your family members.

2. Invest your Savings

By planning and implementing the budget, you can surely accumulate some savings. But, if you are not investing at least a part of your savings, you are actually missing out on money-saving opportunities. You need to invest your savings in various asset classes to build up substantial wealth. Various investing options are available in the marketplace, such as equities, bonds, and mutual funds. Depending on your financial goals and risk tolerance, you have to design your investment strategy. You can also get professional help to design your investment strategy.

3. Slash off your Credit Card Debt Burden

If you’re too badly in debt, you should immediately take steps to slash your debt burden. Nothing can be worse than staying in high-interest debt; unless you pay them off, the interest rate will keep rising. Go for debt consolidation to pay off credit card debt easily. You can also consider professional debt relief help. You will be provided with affordable monthly payments to easily get out of debt. The interest rates on consumer loans may rise this year; therefore, you should ensure that you stay equipped with enough money to combat debt.

4. Make Regular Debt Payments

You will have to try to make regular debt payments, irrespective of the debt relief option you are following to pay off the debts. This will help you stabilize the whole situation a lot within a few months.

5. Visit a Credit Counseling Agency

You must redirect yourself in a better direction to manage a high credit card debt. You can visit a reputable non-profit credit counseling agency to know the best option for your problem. It may just be the right option for you. Ensure you check the counselors’ credentials and stay connected to only agencies that have committed to certain ethical and professional standards through the NFCC (National Foundation for Credit Counseling) and the AICCA (Association of Independent Consumer Credit Counseling Agencies). The agency can also suggest you enroll in a debt management or debt consolidation plan.

6. Choose a Plan to Repay your Debt

If you agree to a debt consolidation or a debt management plan, then you may get a debt repayment plan according to the plan. Thus, you’ll be able to get out of debt after a certain time. Make sure you choose the best so that you can manage your finances in a better way.

7. Put Away Money for a Rainy Day Fund

Money in a jar and showing it growing over time

You should keep aside money for a rainy day fund so that you have enough money to pay off your debts with. As the credit situation is expected to be tough, it is always a wiser option when you can repay your debts on your own as you can save dollars on unnecessary fees. If possible, you can save money in a high-yield savings account so that your money grows.

8. Curb your Spending Habits

When you’re warned of a recession, and you’re interested in surviving through it, you should check your bad financial habits. If you can make sacrifices now, you can at least dream of living a better life later. Don’t eat out or subscribe to magazines that you don’t read, as this is just another way to waste your hard-earned dollars.

9. Stop Changing Jobs

As the unemployment rate is hovering around a close-to-double-digit level, it is not a wise decision to change jobs. Though you may be highly qualified, getting a job has gradually become tougher with the changing economic conditions. Stick to your job and give your 100% so that you don’t face the risk of losing track of your fixed monthly income.

10. Get yourself Adequate Coverage

 If you want to stay safe during a bad economic state, you should get adequate coverage on your health, life, and auto insurance policies. If you can at least make sure that you have enough coverage on your policy, you won’t be subject to any financial surprises in the long run.

11. Try other Forms of Income

You will have to try some other income forms to improve the cash flow. There are various offline and online options through which you may be able to earn good money and use it towards savings and debt payoffs.

Therefore, if you’re keen on combating the slow economic condition, you should be financially diligent and competitive. Don’t get yourself habituated to debts, which will lead to a further financial mess.

12. Create an Emergency Fund

A poor economy means an unstable employment market. Thus, you should be prepared for a sudden job loss and change in job. You should also be prepared for many other emergencies like illness, sudden accidents, and natural calamities. Thus, try to save at least 6-9 months of savings in an emergency fund. 

Conclusion

Financial spring cleaning may not be as joyful and exciting as your closet cleaning. But this can shape up your financial health in the long run.

If you are drowned under the sea of outstanding debt right now, you should get out of the debt as soon as possible. After that, save as much as possible. It is recommended that you start this financial exercise only from childhood. Here, learning good financial habits must play a very important role. This can imbibe this habit upon you at you.

Moreover, if you can follow this financial exercise all through your life, it is likely that you will never fall into debt troubles. Rather, by following these financial moves, you can secure a better future for yourself and your family members. Here, we briefly discuss some money-saving tips that you must follow to secure a better future.

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