How to Save Yourself From Financial Ruin
When you were in high school, it probably seemed simple to keep your finances straight. After all, you didn't have to consider credit cards, loans, interest rates, savings accounts and everything else that comes with adulthood. If you don't actively watch your finances and make a strong effort to keep your money situation under control, you can quickly spiral into financial disaster. Fortunately, you can save yourself by simply making smart financial decisions.
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Instructions
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Pay off all debts. Large amounts of debt can single-handedly ruin your finances, due to late payments and interest rates. Any extra money you earn should go toward paying off your debt, so you can relieve yourself of the burden as soon as possible. Catch up on past due loans, then focus on paying down your credit card debt, starting with the highest interest rate accounts first.
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Save money. After paying down your debts, start focusing on saving money for both your future and for emergencies. For example, you could open up a retirement account and a high interest savings account. For your emergency fund, it's ideal to keep between three and six months' worth of expenses in your account.
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Buy smart. When you're looking at high priced items, such as a house or car, make sure that you can afford the monthly payment comfortably. For example, you should aim to keep car payments below 20 percent of your total income, according to Bankrate.com.
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Think about your purchases. Many people buy on impulse, which can lead to high debt for an item that's not truly wanted or needed. To avoid buying on impulse, wait for at least one month before making a large purchase. If you can afford the item and you still want it after a month, go ahead and buy it.
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Budget your finances. A budget can turn financial stress into financial freedom. With a budget, your total expenses are laid out in front of you. You can divvy up the remaining money after your expenses between savings accounts, retirement accounts, entertainment and the occasionally luxury.
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Tips & Warnings
If you find yourself using credit cards too often and adding to your debt, stop using credit altogether.
