Tax time often renews an interest in saving money and paying off debts
As Americans wrap up last year’s paperwork to submit to their accountants or prepare their own tax returns, many regret financial decisions – or omissions – they made in 2014. Usually, people wish they had set aside more savings. However, many struggle to meet their monthly obligations and, with the sluggish economy and little hope for a quick recovery, setting aside money from each paycheck can seem impossible.
Make small changes
As difficult as it may seem, a few small changes can make a world of difference for your financial future. If you want to get your debt load under control, consider trying the following:
- Pay for everything with cash, not credit: You are less likely to spend money you do not have.
- Pay off credit cards: Concentrate on paying off one credit card at a time and remember that minimum monthly payments will not do the trick.
- Increase savings: Set up an automatic savings plan from your paycheck. Even a few dollars a week can add up over time.
Start by making one change at a time so you are more likely to succeed. After a few months of achieving one goal, start another.
Avoid tempting pitfalls
If you find yourself in a financial bind, it is often easy to fall prey to a solution that might appear to be a quick fix but which can hurt you in the long run.
As employed individuals try to forestall financial difficulties, they may turn to their IRAs, 401(k) plans or other retirement savings accounts to help pay their bills during tight times. However, this is like taking money away from your future self; if you cannot cover your monthly bills while you are collecting a paycheck, think of how much more difficult it will be to pay those same bills once you are retired.
Borrowing money, whether from your retirement account, a bank or family member comes with costs. Not only are you betting on having more money in your future with which to repay the loans – not always a sure deal in these uncertain times – there is the added cost of interest payments.
If you refinance or take out an equity line secured by your home, you run the risk of owing more than your house is worth. Georgia has one of the highest foreclosure rates in the nation with an average of one in every 328 housing units receiving a notification of foreclosure.
Debt relief strategies
If you are overwhelmed by your financial obligations, there are a number of strategies for dealing with your overwhelming debt. For some people, filing bankruptcy is their smartest option. Through a Chapter 7 bankruptcy filing, all non-secured debts may be erased and a Chapter 13 bankruptcy can make it possible for you to keep your home.
If you have a heavy debt load and are not sure of the options available to you, consult with a debt relief lawyer who can advise you of various strategies to relieve you of your financial burdens.