Nearly two-thirds of the workforce is one paycheck away from poverty. If you think about it, those are unbelievable statistics. This number consists of those who make modest amounts of money and those who make exceptional amounts of money. What this reveals is that far too many people don’t understand how to manage money. Listed below are a few ways to improve your financial status.
Paycheck to Paycheck Lifestyle
If you currently live paycheck to paycheck, you probably already have several loans and credit cards, and some of them are either completely maxed out or near their credit limit. This type of lifestyle sets you up for financial disaster at every turn. You make late payments or default on a payment altogether and because of this practice, you have a low credit score. In order to get your monthly bills current, you need to borrow money. However, using a traditional bank with a less than desirable credit score will not provide positive results. Thankfully, there are other lenders who do offer personal installment loans, even if you have a few marks on your credit report.
Chaos breeds chaos, and that’s the truth. If your bills are piled in several locations, you don’t really have a handle on what you owe and to whom you owe it. Instead, gather your bills and a sheet of paper, and then list them one by one. Make sure to include separate columns for the payment due date and minimum payment required. Then add-in daily expenses throughout the course of the month like gas, food, and essentials. Once you have a complete list then add up the amounts using the minimum monthly payment. Lastly, figure out the net income you bring in from all sources and deduct the amount of your monthly bills and expenses from this number.
A Better Understanding
Now that you know what you need to pay out each month and the amount left over after deducting these expenses, you’ll have a figure that you can use to begin to pay off debt, create savings and save for your retirement. Knowing what you owe out will also give you a visual of what you spend your money on. This will allow you to focus on cutbacks across the board. For example, if your cable bill keeps climbing, contact the service provider and remove channels. If you discover that you spend an unbelievable $400.00 a month on coffee and lunches, you can make instant changes.
Improve Your Credit Score
While your credit score may just seem like a three-digit number, it’s something that lenders and other businesses use every day to determine a person’s character and worth. You see, to them, if you are irresponsible with money you’re considered high risk, and today, many companies use your credit score as a component in the hiring process. The good news is that if your credit score is low, there are ways to improve it. However, bringing your credit score up to good standing will take several months and, in some cases, a couple of years. Reducing your debt and paying your bills on time are two of the best ways to improve your score.
Learn to Pay now
The only way to reduce debt is to stop accruing it. Too many people use their credit cards to supplement their income or to buy things they otherwise could not afford. Unless you’re able to pay the credit card bill in full by the due date, you should not use it.
The mismanagement of money can make your life anything but comfortable. It costs you extra in fees at the bank for overdrafts and in higher interest rates for a home or a loan. It also can prevent you from securing an apartment or insurance and even play a role in whether you get a job.