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5 Steps to Get Your Finances Back on Track

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track finances

Are
you paying too much for things like food, cable connection, cell phone bills,
etc? If your monthly expenses are outside your budget, you better find ways to
cut costs and make more savings to get your finances back on track.

track finances

You
don’t need to a personal finance expert to be able to cut costs, save and
invest your money in assets that will potentially grow in the future. Just
follow a few tried and tested steps and you will notice a huge difference at
the end of the month.

Follow these 5 steps to get your
finances back on track.

1. Install an expense tracker app
on your phone

Clarity Money is a personal finance app that acts as your assistant. You can track your spendings Vs. your current monthly income. This app helps you take control of your budget and expenses. It uses data science and machine learning to understand your spending behavior. This is necessary as the app notifies you at the end of every month with a graph that shows your spending vs income.   

2. Invest in 401k

Getting your finances back on track also involves planning for retirement right from a young age. Even if you are in your 30’s or 40’s, investing in a 401(k) plan is a must. It’s great if your employer is willing to contribute to the plan. 

The
money that you invest in your 401 k retirement plan is tax-deductible. For
someone struggling with their finances, it is recommended to go for the  Thrift 401 k plan. Under this plan, you will
get a reduced salary with the 401k contributions already deducted. So, your
money is going nowhere except in your retirement fund.

3. Find ways to make extra money

Sacrificing
your free time to make some extra cash will be beneficial if getting your
finances back is your number one priority. No one likes to work at the end of
the day when you are tired and just want to relax. But to execute a successful
side-hustle, you will have to go against your emotions and do things that most
people are not willing to do. That is, work hard even when you are dead tired.

4. Refinance your mortgage
interest rate/student loan

Refinancing
your mortgage loan can be a great decision if you find a lender that is willing
to lend you money for an interest rate lower than the existing one. You can
also look for lenders who are willing the extent the term for the repayment of
the loan. You should consider refinancing, even if your new lender is giving
you a 1 percent lower rate than the previous one.

5. Cut down credit card usage

Last
but not least. Credit cards are one of the main reasons behind persistent
debts. Credit card companies are clever and if you are a novice user, you are
highly likely to fall in of the hundred different traps laid by them. It is
better to keep the credit card usage to a minimum and pay the bills on time.

Summary

Even
if you are a novice at managing your finances, you should not panic, just
follow the tried and tested ways and you will get your finances back on track
within no time. Be committed to the recovery process and don’t relapse no
matter what. Getting your finances back on track might take a few
months(depending on your current situation), so be patient.

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