The inauguration of Barack Obama as the 44th President of the United States ushered in a new era.
As he said in his speech on Tuesday, January 20, 2009:
“What is required of us now is a new era of responsibility — a recognition, on the part of every American, that we have duties to ourselves, our nation, and the world, duties that we do not grudgingly accept but rather seize gladly, firm in the knowledge that there is nothing so satisfying to the spirit, so defining of our character, than giving our all to a difficult task.”
For each of us to help Obama fulfill his goal for America, we can start by taking responsibility for our own personal debt.
Here are 5 tips to get your financial house in order.
1) Use more cash than plastic.
Before you go shopping for anything, even groceries, hit the ATM first – armed with your budget and your “need” list so that you don’t buy more items than you planned, or purchase items priced higher than you should be spending.
Take out exactly the maximum amount you’ve determined you can afford and will need to purchase your items of necessity (not just the items you want, but the items you “need”).
Later, when you are out of cash, that’s it. Leave the mall or whatever store you’re in.
Resist the temptation to whip out plastic to buy more stuff.
2) Write down all your debts.
To get a clear sense of your finances, you really need to know how much you owe, to whom, and how much interest you’re paying on your debts.
You don’t want to guess about debts. Do you owe $5,100 or is it more like $9,100? Getting your bills listed in black-and-white is a sure-fire way to start simplifying your finances and seeing where your cash is going.
3) Pay your bills online.
Online bill payment is a great service for busy people. Use it as a time saver to pay those fixed monthly expenses, such as your mortgage, car note, or insurance payments.
Online bill payments also helps ensure that you don’t forget to pay bills, which can result in late payments or negative marks on your credit report.
4) Pay more than the minimum amount due.
Don’t fall into the minimum payment trap. Minimum payments in the short run really mean maximum payments in the long run.
To avoid paying exorbitant amounts of interest and being in debt for life, you must pay more than the minimum balance due.
If possible, try to pay 2 to 3 times the minimum payment.
5) Call up your creditors and negotiate down your interest rate.
Every six months or so, starting today, call up your creditors and ask for lower interest rates.
Often, credit card companies will lower your rate on the spot, simply because they don’t want to lose your business to another company offering lower rates.
If you can knock down the interest rate on a card with a 21% interest rate to 12% or so, you’ll be saving yourself a lot of money.
Your minimum payments will also be less each month. If you’re successful, however, don’t lower your payments to match, see Tip 4.