A few questions to consider. When you are attempting to change your financial situation, you must consider a few important things in order to help you develop your plan to get out of financial anxiety and into financial comfort. One of the first things you should do is calculate your fixed and variable monthly expenses. Below is a link to our monthly expense memory jogger tool that will help you identify all of your expenses. Once you have done that, you will be able to see where and how you can adjust, reduce, or even delete some of your fixed and discretionary expenses.
First, can you reduce any of your fixed expenses? Fixed expenses are obligations that you must meet every month such as your rent or mortgage, car note, car insurance, credit cards, student loans or utility bills such as gas, electricity, and water. Reducing fixed expenses is difficult because we usually don’t have an option on whether to pay them or not. After all, if you don’t pay your rent, you’re likely to end up on the street. Even so, reducing your fixed expenses is possible. For instance, you can lower your utility bills by turning off lights that aren’t being used, raise your thermostat in the summer and lower it in the winter or being conservatively conscience about your water usage. You can sometimes adjust fixed expenses by bundling certain bills, phone, cable, wifi or combining your auto and homeowners or rental insurance with one provider. Service providers often offered discounts in such instances. Many people do not utilize land lines anymore and their cell phone is their only source of communication. However, you may be able to adjust the cost with your cell phone if you remove certain optional features from your plan. Some of these features are not necessary to your regular phone functions.
Next, are you prepared to reduce your discretionary expenses? Now, this is usually the first place to start. Discretionary expenses are based on want rather than need cutting them can free up significant room in your budget to pay fixed expenses as well as start or add to your savings. Unless you need them for a job, cable and satellite are often discretionary expenses. Credit cards can cross the line between fixed and discretionary expenses. Having too much credit card debt is never wise. You should keep only one or two for emergency purposes. If you have several credit cards, even though the bill is fixed every month, you still might be able to reduce or erase the debt by paying off those with smaller balances. This action alone can save you thousands of dollars in interest plus free up additional income to go toward your fixed expenses that cannot be changed.
The next question is, can you identify and pursue additional sources of income? In a perfect world, 40 hours a week in a full time job would provide you with the income you need to meet your obligations. In reality, it often doesn’t work that way. You may need to get creative in order to locate additional sources of income, especially if you fallen on hard times. Do you have a hobby that can generate income such as baking, childcare, building things, painting, or any skill that people would be willing to pay for your services? Does your schedule allow you to temporarily take on a second job in order to create an immediate influx of income to get you through your crisis? This might also be an option for you. Are you willing to apply for government assistance programs if needed? The US federal government provides a range of services for Americans in need that are governed and dispensed by state governments. Therefore, you should check for available resources to address your financial crisis.
These are just a few of the questions you should consider when formulating a plan to help you get through your money woes. The focal point is to put your income and expenses on paper. See where you can cut your expenses and generate more income. These are important steps towards regaining your footing on the path from financial anxiety into financial comfort.
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