Bankruptcy, Debt Consolidation :: Putting The Personal Finance Puzzle Together Before Your Life Falls Apart

Putting The Personal Finance Puzzle Together Before Your Life Falls Apart

It only takes one unexpected expense or income shortage to unravel your financial safety net when you re living pay check to pay check. Luckily, finding financial security is more feasible than you think.

The big picture

There are thousands of books, websites, and classes on financial planning. However, putting all that information together, and then applying it to our lives, is like trying to solve a 5,000 piece jigsaw puzzle without the picture on the front of the box. You ll never get control of your personal finances until you see how all the elements, such as debt, taxation, spending and savings, fit together.

Debt reduction

If you feel like you re drowning in a sea of debt, you re not alone. According to The Federal Reserve, about half of the American population is heavily burdened by unsecured debt. Many so-called solutions, such as Consumer Credit Counseling services and bankruptcy actually make problems worse by dragging out payments and ruining credit.

If your credit card debt is out of control, consider calling a debt negotiator. Unlike Consumer Credit Counselors, debt negotiators can actually work with your creditors to reduce your debt up to 40% without affecting your credit score.

Tracking Expenses

People who accurately track their expenses discover that they are wasting, on average, $312 a month. That s hundreds of dollars you could be using to live within your means, pay off debt, or save for your future. Keeping up with your spending habits is the first step toward seeing the big picture. To make it easier, try using personal finance tracking software to find out where every penny of your pay check is going.

Saving for a rainy day

Only 3 in every 100 Americans are financially ready for retirement. Failing to save for retirement or unexpected expenses is one of the biggest financial mistakes you can make. Many people look at savings as something they will do after they buy all the things they want and pay off all their debt. This is backward thinking.

Instead, think of the money you set aside as pay checks for the future. Pay yourself before you pay creditors, buy goods and services, or indulge your loved ones. By setting aside a percentage of income each month you can strengthen your financial safety net, while still meeting your current wants and needs.

Feeling taxed?

Most Americans are over-paying their taxes by as much as 49%. The easiest way to build wealth is to keep more of the money you already make and that means giving the IRS only what it expects when it expects it, and nothing more. A little knowledge of tax laws and tax preparation can go a long way to increasing your income.

Don t rely on an accountant to save you money come tax time. Accountants not only charge high hourly rates but always lean toward conservatism with regard to deductions in order to avoid possible penalties for wrongfully counseling clients. This protects their pocketbook, but usually not yours.

Knowledge leads to financial power

Fight for financial freedom of many fronts, not just one. Look for financial information and resources that provide comprehensive tools that help you, track spending, reduce debt, avoid over taxation, and save for your future.

By: Suzanne Rekow

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