Originally Published Jul. 4, 2014.
Every Fourth of July, we celebrate the nation’s freedom. This is also a great time to take charge of your money in an effort to gain financial independence. There are many ways to take control of your finances. Looking into retirement options, assessing and taking control of your debt, or creating a budget are all ways to start your personal financial liberation. Here are a few first steps to get you moving in the right direction.
Pay more than the minimum on credit cards:
When you just pay the minimum on your cards, you’re not effectively chipping away at the debt. This approach will just prolong repayment and result in paying more interest. Here’s a great example:
With a $10,000 credit card debt at 18% interest, even if a person never adds any purchases or fees to the account, and makes a monthly on-time payment of 2% of the balance, it will take them 48 years to become debt-free. Further, that original debt of $10,000 will cost them $36,825, with $26,825 going toward interest.
So if you don’t want to end up in a situation like that, strive to pay more than the minimum. You’ll be happy you did.
Track spending:
How can you know what to cut back on unless you’re aware of what your spending? Note what you buy (and how much you pay for each item) in a notebook or Excel spreadsheet. Do this for at least a month. This will show you where you need to cut the fat.
Keep tabs on your credit report:
Make an effort to regularly check your credit report for errors. You are entitled to receive one free credit report from each of the three major credit bureaus (Equifax, TransUnion, Experian) once a year. You can get your free reports at annualcreditreport.com.
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