Would you like to transform your financial health and draw closer to financial freedom by following a few simple rules? If so, check out the five items below, any one of which has the power to make your life better in multiple ways. Choose to follow one or more to add muscle to your budget and long-term ability to save.
Follow the 30 Dollar Rule
Credit card holders can help rein in their spending with this simple guideline: never use plastic on any purchase that is under $30. Not only will you save in interest charges but will likely notice that impulse buying decreases considerably.
Learn the Power of Refinancing
Some people go through life never learning this valuable technique, but it can save you a bundle if done right. Doing a re-set on a mortgage, student loan, or even a car loan can transform your monetary health in a matter of days. For instance, if you have education debt, refinancing it through a private lender accomplishes two goals at once. First, you can consolidate multiple obligations into one simple loan with a single monthly payment. Second, when you do a refinance agreement, it’s possible to take advantage of better terms, a more favorable interest rate, and lower monthly payments. All of which means you stand to save money in both the short and long-run.
Use the Buddy System
Team up with one or two people you trust and have weekly money meals, to discuss problems and challenges you are facing. Without divulging personal financial data, it’s possible to leverage the power of several minds to come up with solutions you might not think of all by yourself. Holding money talk power lunches like these is a good way to stay on top of any issues that come up, like how to handle job loss, how to improve credit scores, or how to better plan for retirement.
Graph Your Net Worth
Net worth for an individual represents total assets minus total liabilities. The figure changes as you grow older, improving or deteriorating from time to time, but usually getting better in the long-run. Many people know their net worth at any given moment but never think to graph it in order to see changes. And, seeing how yours fluctuates from month to month can yield great insight into financial health. Consider keeping a graph and adding one point at the end of each month. After a half-dozen or so entries, you’ll have the chance to see whether your overall money situation is getting better or worse.
Find Out How Much House You Can Afford
Thinking of purchasing a house? Do you know the mathematical rule for figuring the maximum amount your mortgage payment should be? The answer is 28 percent of income. So, if you take in $4,000 per month, and are shopping for a new home, aim to keep the monthly payment below 28 percent of $4,000, which comes to $1,120. Of course, it’s even better if you can get well below the 28 percent mark; just be sure not to go above it or you’ll be putting undue stress on your finances.