The good thing about being out of debt is that you have extra money laying around to start looking for the best roth ira providers to secure your future, but let’s rewind a bit to take a look at your whole financial picture in order to start from the beginning so you can look to get out of debt, not to mention stay out in the future. Whether it was careless spending or financial hardship that got you to this point, the good news is there is time to fix it, as it’s never too late, provided you can start making some sound financial decisions in order to set yourself up for success going forward so that you will not go down that tough financial road ever again.
Check Your Credit Report
Before we get started on what you know, let’s just make sure that everything that you have reporting on your credit report is up to date an accurate. The major credit bureaus will provide a free copy of your credit report at least once a year for you to review. You never know these days who may have your info, as you always hear about card information being stolen at the gas pump or leaving it out too long paying a bar tab, I’m not sure how they can take a picture and use it, but it works somehow. Even worse, stores and even a credit bureau continue to get compromised, sending your info into the wrong hands.
If you really want to free up extra money in order to put a dent in current careless spending or be able to have extra money and not go down another downward spiral it’s a good idea to reduce expenses. It even starts with living expenses and the car you drive, making sure you live within your means. You certainly don’t want to be “house poor” and then you are constantly working from behind to get out in front of the rest of your expenses by the time you add in utilities.
Make the Difficult Cuts
Freeing up extra money isn’t always going to be easy so sometimes it takes making the difficult cuts. Take going out to eat for instance, sure it’s nice to have someone else serve, cook, and cleanup after you, but you pay for it. If you were to go grocery shopping instead and preparing meals at home, you could save hundreds each month. The next tough cut could be getting rid of cable. Sure, you are used to having it, but if you actually think about how much you actually watch of the available channels, what you DVR, not to mention if you spend time watching Netflix anyways, it may be time to cancel and save the extra couple hundred dollars.
Pay Down Debt
Now that you are really freeing up extra money it’s time to put a major dent into your debt, and that starts with paying more than the minimum; actually, as much as you can afford each month until the debt is gone. You can use a credit card to charge up as much as you want, but if you can’t pay off the full statement balance by the due date you start to incur interest and depending on the card and balance, could be spending a significant amount of your hard-earned money on interest.
Build an Emergency Fund
You never know what life will throw at you so it’s a good idea to be as prepared as you can in case you get hit with unexpected bills such as from the vet, car repair, or needing to replace a home appliance. If you can keep a few months’ worth of expenses in an account in case of an emergency, you can save putting on a credit card and risk going into debt not having the extra money to pay it off. This way you can take from this account and then work on replenishing it for next time.
Use a Rewards Credit Card
While a credit card can be scary for some, it actually can make good financial sense to use one, in fact for all purchases. With the amount of rewards card available now and the competition, you could earn points to redeem for gift cards, airline miles, or hotel rooms just by making the normal purchases you would be making anyways, therefore earning free money, provided you can, again, pay the full statement balance by the due date, otherwise any interest would probably outweigh what you earn in rewards.