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Refinancing your Home - Things to Consider when Refinancing your Home

By James Wilson

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Do you find yourself struggling to make ends meet every month? You aren't alone. NerdWallet reports that the average U.S. household with at least one credit card has $15,607 in debt. Altogether, Americans owe $11.63 trillion in debt as of 2014, a 3.8% increase from the previous year. What's going on?

The devil, as they say, is in the details. Many are guilty of practicing bad financial habits on a regular basis. Fortunately, it's possible to break them with a little organization and a lot of self-control.

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Late Bill Payments

Falling behind on bill payments can be especially tough on your finances. Late fees account for a hefty percentage of the original bill, sometimes up to 15 percent, resulting in nearly 10 percent more spending each year if you're consistently late on paying your bills. This bad habit also takes its toll on your credit score, making it a top priority when trying to figure out how to get your finances on track.

 

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If you have trouble paying bills on time, it's probably not because you simply forget you owe people money. Still, boosting your organization skills might make the responsibility easier on you. Set an alarm on your smartphone that alerts you when each due date is approaching and one more on the day you should actually pay the bill. This kind of structure ensures that you don't get confused about which bill is due immediately and which bill could stand to wait a couple of days.   

Buying Frivolous Items or Services

Where exactly is your money going every month? Are you paying for a cable package when you spend more time watching streamable media? Perhaps you picked up a gym membership as part of a New Year's resolution but rarely find yourself on that treadmill. Whatever the case, we're all guilty of wasting money on things we don't actually need. While an extra $25 or $50 a month doesn't seem like a lot of money, every cent of that could be used to ease any debt burden you may have. 

 

Take inventory of each penny you spend to see how much of it you're wasting on things you don't need. Ditch your cable package in favor of a Netflix subscription and go jogging at the park instead of paying to visit the gym twice a year. Only buy food you can feasibly eat within the next couple of weeks, and always pass up spending money at fast food joints. 

Living Beyond Your Income

Charging items to a credit card is only beneficial when you can actually pay that debt off. Of the $11.63 trillion Americans owe, $880.5 billion of that comes from credit card debt. Additionally, bank fees as a result of insufficient funds add up quicker than you realize. Just four overdraft fees a month at $25 each comes out to $1,200 a year that could be usefully spent elsewhere. Loans are also costly and can play a large part in your financial crisis. 

 

Again, it's important to take a step back to see where you're going wrong. Analyze your spending and see what adjustments should be made. Chances are you're living beyond your means. Rather than having to pull out the credit card every time an emergency expense pops up or being forced to take out a loan, start building on a small savings account especially for those surprises. 

 

Not Thinking Ahead 

Finally, always take what's to come into consideration. Even though you can't predict the future, you know that you'll have monthly expenses, some expected and others that aren't. Plan for that. Saving money isn't always easy, especially when you have so little. But even putting away $100 a month can help you in the long run by putting a dent in a car or mortgage payment. The easiest way to do this is to pull the money into your savings account right when you get it and pretend it doesn't exist until you have an emergency.

 

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Getting out of the hole isn't easy by any means, but if you work on changing some of your poor financial habits, you can start to get your life back on track again. 

Published on Nov 02, 2015

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