Personal finance is tricky. Most of us don’t feel that we understand it, and those of us who get things wrong can end up facing a terrible financial disaster. It’s all too easy to be faced with a sudden bill or other expense that you simply cannot afford.
Below, we’ll talk about how to stave off financial disaster, how to respond to unavoidable situations, and how to rebuild for the long term — and prevent the next disaster.
Avoiding reckless spending
Saving should be simple: We’re supposed to spend less than we earn and pocket the difference. But we often find that, in practice, this is tough to do.
Part of the problem is reckless spending. We may spend the same amount on groceries every week, but our careful choices throughout the week can be upended by one over-the-top bar tab on Saturday.
One place to watch out for reckless spending is in the tech space. iPads, iPhones, and other smart devices are very pricey. And too many of us choose to buy new ones too often, experts say. These are great devices, so make them last. Instead of searching online for the latest and greatest new models, Google “iPhone repair near me” and let an affordable local repair shop keep your current device going a bit longer. It will save you money.
Managing debt
Debt can be a tool in finance, but it’s one that you need to use carefully. Used properly, explain the experts at Eastern Loans, debt can help you handle expenses in the near term and give you a chance to pay off everything on your schedule.
But you need to stay organized. As soon as you’re back on your feet, pay down debt fast and focus on knocking out debt with high interest rates first. Being organized and smart will be the difference between bailing yourself out with a well-timed loan and making your situation worse by trapping yourself in the cycle of debt.
Getting real help
Sometimes, financial disasters just aren’t surmountable without the right help. There may come a time that you need to think about bankruptcy and other options. When that happens, consult with a lawyer.
A bankruptcy lawyer is the ally you need to come out of your situation as financially stable as possible. Don’t mistake predators for helpers — if you’re out of options, you need an attorney. And don’t worry: You can find ways to afford one when you’re broke.
Moving forward
Financial disasters are incredible stressful, but they can be conquered. And if you’re lucky enough to get out on the other side without losing your shirt (or your mind), then you’ll want to immediately start thinking about how to avoid such issues the next time.
Your long-term financial health depends on your avoiding reckless spending, but you also need to pay attention to the little things. It’s time to make a personal budget and stick to it. Structure your budget such that you’re saving as much as you can — up to 10 percent or more of your income, ideally.
With those savings, create an emergency fund. This fund will be your first line of defense the next time that you run into a financial jam. Hopefully, you’ll be able to grab this cash to pay sudden expenses instead of getting short-term loans or putting more charges on a credit card. With your emergency fund in place, start focusing on long-term goals like retirement.
Is any of this easy? Of course not. But if you work hard and take great care, you can build a brighter financial future for yourself and your loved ones. Good luck!
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