Many families are digging out from recent snowstorms, but others are digging out from outrageous debt. Make a plan to get your finances under control in the new year.
Drowning in debt?
Whether you overspent on Christmas or last summer’s vacation, the new year is the time to get your financial house in order.
Your kids got everything they wanted for Christmas, but at what cost? Getting in over your head with Christmas spending is a common problem, so Andrew Schrage, co-owner of Money Crashers Personal Finance, offers some practical tips to help families reduce debt and get money matters under control.
“One thing that is important for parents to realize is that regardless of whether they overspent on a recent vacation or during the holidays, there's nothing that can be done to change that,” says Schrage. “What can be done is the creation of a plan to pay off the debt as quickly as possible.”
Pay off credit card debt
“The time is now to get your credit cards paid off, and you must commit to never carrying a balance again,” advises Schrage. “This should be your number one goal going forward as these wasted interest payments are killing you financially.”
Don’t use your credit cards to pay for ballet lessons or private school tuition. In fact, don't use them at all unless you can afford to pay off whatever amount is due at the end of each month.
Get on a budget
“In order to free up funds to apply to your balances, you must establish a personal budget,” Schrage explains. “Compare your total monthly income to your monthly expenditures. Then, identify the ways you can cut back on your expenses to ensure that you are spending less than you are earning.”
With the start of the new year, you’ll need a planner to track your family’s activities. Along with Johnny’s piano lessons and Susie’s softball practices, you should also document money coming in (from paychecks) and going out (for bills).
Reduce monthly bills
Modern families are high-tech families, and staying connected means big monthly utility bills. “Review each monthly billing statement and look for unnecessary fees applied to your accounts. Contact each provider and work to get these fees eliminated,” suggests Schrage.
“Research new cell phone, cable TV and internet packages. The chances are high that you can find ways to save by switching companies. You may even want to consider bundling these services to save even more.”
Prevent future overspending
“In order to keep yourself from falling back into personal debt, you must find a way to prevent overspending going forward,” says Schrage. “Here is the simplest solution: Each time you reach for your wallet or purse, ask yourself, ‘Do I really need this?’ (Do my kids really need this? Does our family really need this?) If you take the time to think about it, you'll find that in most cases the answer is no.”
Clip coupons to save on groceries
Free up even more funds to devote to your credit card balance. Reduce your grocery bill — by as much as 80 percent — simply by clipping coupons! "Buy multiple copies of the Sunday paper and put together a filing system so you can use your coupons before they expire,” advises Schrage. “Find out when your grocer doubles the value of coupons and shop exclusively on that day. Sign up for the customer loyalty programs to receive even more coupons and special offers.”
Generate income in spare time
“Instead of surfing the internet or watching television after you've called it a day at work, consider some of the many ways to generate income in your spare time,” says Schrage. “You can sell your old digital cameras, cell phones or other small electronics for a profit on websites such as Amazon or eBay, or even fill out paid online surveys.”
Do you have a special area of expertise? Consider launching a consulting business! “Get some business cards printed, spread the word to family and friends and start business pages on social media websites such as Facebook and Twitter,” recommends Schrage. “The amount of money you can generate is virtually unlimited — it could even eventually blossom into a full-time career.”
More family-friendly budget advice