Getting out of debt and handling your household finances better is an excellent way to achieve financial stability and gain peace of mind in 2020. If you are having a hard time achieving these goals, then it is highly recommended that you follow the tips below.
Here are 5 ways to get out of debt in 2020:
1. Track Your Spending
The first step in controlling your debt and spending is to monitor where your money goes. List your long-term debts e.g. car loans, student loans, home mortgage, etc. Then list all the other monthly obligations e.g. insurance premiums, internet, cable TV bills, utilities, credit card bills, etc. Now with the start of the new year, write down all the money you spend during January and make sure every expense is listed. There are several ways to monitor and track your spending e.g. apps, pencil-and-paper lists, and more. Choose your preferred method and stick with it.
2. Cut Out Costly Habits
Brown-bagging workday lunches rather than eating out at lunch and cutting out costly drinks are effective, easy ways for quick savings. Other habits like gambling, drinking, or smoking are costlier and you may need some counseling to cut them out. Eliminating your costly habits will save you a lot of money as well as improve your health.
3. Purchase Only What You Can Afford
Try to avoid using your credit cards too much and pay all the flexible spending with cash. Multiple studies suggest that credit cards make people spend more. This doesn’t even include the interest costs on credit card debt. Buying what you can afford and using your hard-earned cash for a purchase will allow you to save money as you will give it more thought before paying.
4. Set Goals
Setting goals is motivating. Don’t just set ‘save more’ or ‘spend less’ goals, it is recommended that you set long-term concrete goals. Setting some short-term financial goals as well as some long-term goals will motivate you to save money and help you get out of debt. Make sure that your goals are realistic. Some of the key options for financial goals to set in 2020 include working to establish an emergency fund of 3-6 months’ worth of expenditures, saving a certain amount for a down payment on home or a car, etc. Paying off a certain debt within a specific amount of time is another goal that you should pursue.
5. Cut Housing Expenses
If you are spending half or more of your pay on your monthly housing expenses, then it means you are severely cost-burdened. It is recommended that you refinance the loan and extend the repayment period if you are having a hard time making your mortgage payments every month. This will help you significantly diminish your monthly payments.
Hopefully, the new year will offer you opportunities to get out of debt and get your finances in order. In case you have a lot of debt, you might want to consult with a bankruptcy law firm about your legal options. Although filing for bankruptcy is not suitable for everyone and should be used as a last resort, it is a legal tool that can help you start fresh.
The Travis Law Firm provides professional legal representation for Chapter 7 & Chapter 13 bankruptcy services for residents of all cities in Riverside and San Bernardino Counties. We have offices in Riverside, San Bernardino, Victorville, Temecula, Cathedral City and Ontario for the convenience of our Inland Empire, High Desert, and Coachella Valley clients. For more information about our bankruptcy law services and other legal representation, call us today at 1-800-BANKRUPT or (951) 274-9501.