Effective Personal Finance Strategies for Tough Times

Everybody goes through financially challenging times. When you’re young, you don’t really have to worry greatly because it’s so much easier to bounce back, but when you’re already in your 50s, opportunities for increased cash inflow are often minimal.

If money’s tight and you’re worried about having enough for your present needs (and more so, for retirement), it’s crucial to make drastic life changes now in order to keep your head above the water. Here are three smart personal finance strategies you can use to stay afloat.

  1. Evaluate your expenses and stop spending money unless you absolutely need to. Develop a fresh way of thinking about where your income automatically goes. Say, you pay $50 for your landline phone, and everybody in your household uses a mobile phone. Perhaps you can do without the landline and rethink your family members’ unlimited cellphone plan. Or perhaps, you can do without cable TV since most shows can be watched online for free nowadays. Another thing you can do is to reduce your Internet service plan; many find that there’s really not much difference between the speed of a $40 Internet service package and a $19 one. Saving $50 here, $75 and $21 there will provide you more mileage for your income and even allow you to direct some money to your retirement fund.
  1. Get rid of old credit cards and settle for a 0% credit card for you to use only when you really need to. Stop relying on plastic to make ends meet and just have one credit card with the longest 0% interest program to use for emergencies. When you’re nearing retirement and your income is not getting bigger, the last thing you want is to accumulate credit card balances with growing interest rates. With just an “emergency” credit card, you’ll find yourself using cash more. The beauty here is that it actually “hurts” to depart with cash, so you’re likely to spend more conservatively.
  1. Shop for cheaper insurance. Find a good insurance broker who can help you find a more affordable insurance policy that has decent coverage. With careful research with a trustworthy insurance broker, you can find a $380/month insurance plan to replace your old $850 one – that’s nearly $500 worth of savings every month! Another option for this is to check your state insurance department if your income has dropped drastically; they usually have low-cost programs that are so much easier to pay for regularly.
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