The winter is slowly turning into spring, which means time to dig in deep and get some spring cleaning done. It is great to clean out all those forgotten nooks and crannies, and empty out boxes and drawers, don’t forget another important area to spring clean – your finances.
Wash Away Debt
First, take a look at your different debts. Figure out which one to work on first. There are two options:
- Pay off the lowest debt first then roll that money into the next lowest debt. Keep working up the chain of the lowest debt to the highest.
- Pay off the debt charging you the highest interest rates. These debts might be larger in sum, but paying it off will save you all that interest. Once you pay off the highest interest debt, work down the line to the next highest.
In whatever situation you choose, remember that once the first debt is paid off to roll that money into the next debt. Don’t assume since one is paid off you have “extra” money to use. Keep that money allocated debt money to continue to pay down your debt.
Dust Off Your Budget
Take an afternoon and really analyze your spending. To help you get the best understanding, consider following these steps:
- Print off the transaction history of your checking account.
- Use different colors to highlight necessities versus wants.
- Divided up the different bills onto a budget.
- Add up the actual amount spent on bills for the last month.
- Add up amount spent on unnecessary purchases.
- Decide what you can cut back and how.
Once you have a good idea of how you are spending your money, be willing to find ways to cut back in order to save money.
Scrub Away Excess Credit Cards
Having a credit card is a good idea, as long as you can be trusted with it. If you spend money you don’t have with a credit card, time to get rid of it. Since you are working to pay off your debts, be sure you don’t just incur more. Good credit cards to get rid of are specific store credit cards. Those cards can’t be used for true emergencies.
Dig Out Retirement Information
While you are cleaning out drawers, cupboards and basements, be sure to uncover the information to your retirement accounts and see what you can do to increase your deposits. If you don’t have any retirement accounts, open an account and start making deposits. The best way to plan for your financial future is to start preparing today. Talk to someone you trust to figure out what you need to do.
Don’t let your finances sit around and get dusty. Today is a great day to decide to save money, get out of debt and prepare for your future. Find one way to save more money this year than you did last year. Spring cleaning your finances will help you better understand where your money is being spent and how better to save.