Decrease Debt - Improve Income

In order to start saving more and increasing your wealth, you must first begin to pay off the debts you have incurred that are inhibiting your advancement.  Many people have made the mistake of trying to tackle all their debt at once, which quickly leads to discouragement.  And here’s why.

There is nothing motivating about taking huge strides to pay off debt, but never fully realize the impact that it’s having on your bottom line.  If you stash away a few extra dollars towards each debt you have incurred without really keeping track of your progress or celebrating the little victories, you will very quickly experience burnout.

Therefore, your best bet is to first sit down and take the time to list out all of your current debts from credit cards to car loans.  Record the total debt amount along with the current minimum monthly payment on each account.

Next, choose the lowest debt and start to pay a little extra towards this one debt while paying the minimums on the others.  Choose an amount that will stretch you but is still within your means.  Once this debt has been paid off, you can then move on to your next lowest amount and apply the extra payment plus the monthly minimum of your old debt.

Continue this process until all your debts have been paid.  Be sure to celebrate along the way and keep track of your progress.  Over time you can then begin to apply your old debt payments towards a savings/investment account of your choice.

While you are paying off your debts and long after, there are various steps you can take to help increase your overall income while decreasing your expenses.  Essentially, each of the following ideas will require your commitment and discipline to follow through, but turning these ideas into habits can make all the difference.

First, by simply decreasing your spending on discretionary items, you can begin to better manage where your current income is going.  Many people fall into the trap of spending more as they make more, such as finally purchasing that big screen television, making upgrades to the house, taking the family on that 5 star cruise, etc.  Though there is nothing wrong with any of these purchases, we must learn to practice delayed gratification until the timing is right.  The average person typically makes a lot more than they think.

Next, you can take on a part time or second job, even if it isn’t that most ideal position.  Although this can be painful at first, building this discipline can be extremely rewarding and helpful when trying to pay off debts.  Additionally, you can begin to sell items within your household on Craigslist, Ebay, consignment shop or yard sales to bring in some extra cash.   Maybe consider starting a side business with a hobby or trade that you are passionate about.  Try freelancing, mowing lawns, or tutoring kids. 

Finally, you can either get a brand new job or stay in your current position and go the extra mile if you feel there is opportunity for advancement.  In the next post, we will cover some practical steps you can take to increase your income at your current position.  Stay tuned!

5 Steps to Using Your Credit Card Wisely

1.       Do not max out your credit cards every month.  This is a red flag for lenders.  In fact, it is good practice to use no more than 30% of your allotted credit limit.

2.       Since 15% of your score is based on the age of your credit history, it is important to not close out your most seasoned accounts.  In fact, it is better to leave an account open and not use it then to cancel it.

3.       When possible, pay off your full balance on the credit card each month, or as close to zero as you can.  This will help you to have a better score and to stay in control.  By building this discipline you will avoid falling deeper into debt as well.

4.       Increase your credit limit and you will also improve your debt to credit ratio.  This in turn will improve your score, but only take on what you can handle.  The last thing you want is to obtain high credit limits and then max out your cards.  

5.       Try to open at least an account or two with major carriers such as Visa, MasterCard, etc.  You will be perceived  as a lower credit risk.

6 Easy Tips to Cut Back on Utility Costs

With rising utility costs and overall living expenses, people are looking for creative ideas on how to reduce spending. One of the major areas that can have a significant impact on your bottom line, long-term, is with heating, cooling and electric bills.

It's important to take strides whenever possible to help alleviate this financial burden.  I've devised a checklist of 6 items for you to review and determine where you can start cutting back expenses and improving efficiency in your home:

1.     Maintain your furnace and air conditioning units: This is one area homeowners tend to disregard. Yet, just like conducting routine repairs on your automobiles; it is just as important to keep up with these items as well.  It’s only necessary once per year!

In fact, the amount of money you can save in the long run by avoiding more significant maintenance hassles or losing a unit well before it’s time makes this step well worth it.  Additionally, you will maintain a higher efficiency and experience cleaner air too.

2.     Standby power: Did you know that many items around your house such as your TV, entertainment system, Wii, computer, microwave, etc. are constantly drawing electricity even when they are not powered on? 

In fact, items throughout your house such as these typically can account for approximately 10% of your total energy consumption!  Simply by having certain items plugged into a power cord that can be switched off when not in use may have a significant impact.

3.     Consider investing in a programmable thermostat: Installing one can be fairly inexpensive and is extremely useful for families that are always on the go!  Simply set the meter to fluctuate a few degrees during key timeframes, and the savings will really start to add up.

4.     Decrease your water heater’s temperature: By switching the temperature down to the lowest setting can impact your energy bills from 5-10%.  You will still have plenty of hot water and can enjoy some extra cost savings as well.

5.    Change you appliance settings: Many dishwashers, washers, and dryers have advanced settings that could also be increasing your utility bills. Consider turning off those extra bells and whistles such as the heated dry, automatic sensor settings, or wrinkle shield.  Also, you can wash with cold water and only do larger loads when necessary.

6.     Dimmer switches and motion detectors: Another tip is to replace your current fixtures or switches with these energy efficient alternatives.  You will be able to consume far less energy and your family will only use light when necessary.  Even if you don't install these items, get in the habit of shutting off the lights in any room that isn't occupied.

      By following these 6 simple steps, you will begin to save more money and consume fewer resourses. There are so may other ways that you can improve energy efficiency as well, so I encourage you to take the time to research what may be beneficial for you and your family. Be sure to bookmark this page for regular updates and other free real estate related tips.