Give Your Finances an Extreme Makeover for 2012 – Part 2

Chuck you Credit Card

Credit card debt is an insidious problem – the individual payments for each purchase made on credit are small at first but add up in the long run. If you are buying perishable items on credit, you are really in trouble. Credit card debt should ideally be paid in full at the end of the month or used to buy big -ticket items such as furniture to save you paying hire purchase rates. You need to try and pay off your debt as quickly as possible. This may take some dedication on your part as it may involve sacrifices – you need to resolve to stop buying luxuries on credit. Ideally you need to identify the debt with the highest interest rate and pay that off first. This means putting in as much extra money as possible and not using the credit. When that debt is paid off, continue on to the next one and so forth.

Give Your Finances an Extreme Makeover for 2012 - Part 2 1

Up Your Credit Rating

A credit rating is a strange thing – if you have no credit facilities, you are not likely to be able to obtain credit and the reverse also holds true. Credit scores are based on how much debt you have, what your monthly debt repayments are and how you pay your accounts. If you consistently pay your accounts on time, pay more than the minimum amount and have not maxed out all your facilities, you are liable to have a better credit score. When you walk into a bank and ask for a loan or a mortgage, the first thing the financial advisor will look for is your credit score. If it is good, then you will have good chances of borrowing the exact amount you need.

Ensure you are Insured

Insurance is very much a grudge purchase but is also pretty much essential in today’s society. Is your HMO giving you all the cover you need? What will you do if you are diagnosed with a dread disease? What will happen if your car is written off in an accident? These are all questions to consider when debating the insurance issue. The most pertinent question is, “What will happen if I am not insured?”

Secure your Future

You should start saving for retirement from the moment you start earning an income. The earlier you start investing, the more compound interest you will earn and the better for you. You should also have investments that not only keep pace with inflation but beat it. These will fund not only retirement but education plans for children and savings for special events.

The Worst Offender

Your worst enemy when it comes to financial freedom is very often yourself – do not allow your attitude towards money to destroy all you have worked for. Make sure you take a more reasonable approach towards money and start investing today.

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