Providing for a family is just as difficult as bringing up well-behaved children. The mortgage needs paying and the bills need settling, and all the while the children need books for school, food, new clothes, and other necessities. You’re starting a legacy and the last thing you need is your family finances in the red and enslaving you.
So when debt creeps up on you, managing the family finances is an unenviable task… but not impossible. If you can avoid a few financial slip-ups, you’ll soon be popping the cents back into the savings jar.
Here are a few suggestions:
Plan, don’t panic
You wouldn’t head out on a road trip across America without planning your route first, would you? So neither should you try paying off your debts without at least planning how you aim to achieve it. Lay them all out in front of you and see how much you have to pay and by when, and stick to it. Having a plan in the first place will make it easier to track your progress and can help smooth out the bumpy financial road ahead.
Tackle credit card payments head on
When it comes to prioritizing debts, credit card repayments often become priority Z. They’re the first repayments people tend to postpone. This is a financial recipe for disaster because the interest accrues even further. Instead of shrinking, the debt expands.
According to conventional financial wisdom, you should pay off the credit cards with the lowest rates of interest first. There’s logic in that, true; they’re easier to settle. However, you’re doing yourself a bigger favor if you pay off the credit card with the highest rate first. This frees up more money so you can clear more of the smaller debts quicker.
Review your personal banking arrangements
Have a look at the terms and conditions of any bank accounts you hold. You could be paying unnecessary charges and may want to switch to another current account provider. Consider banking with HSBC or other international banks, which offers greater convenience because they have branches all over the world, even in places like the UAE. They can offer more tailored services no matter where you go.
Lighten the leisure
Okay, there’s no need to be a total killjoy, but save on leisure. Replace gym membership with outdoor exercise, such as jogging or cycling. What about cable TV? Cancel it and find an alternative form of entertainment! If you or the kids really can’t live without it, downgrade to a cheaper package or switch to a cheaper provider. Oh and cut down on the takeaways. Making stuff at home saves you money and provides more meals in the process.
Make advance payments
One mistake that people make when paying off their debts is paying the bare minimum. That’s fine if you don’t mind wasting money. If you can put extra towards your mortgage each month or at the end of the year, you should do so. You can save yourself loads of interest in the long term. The money’s better off in your pocket than in theirs.
Running a household is a full-time job and is made harder by having to juggle the finances too. If you get into debt, it’s not pretty. However, if you avoid making common debt repayment mistakes, you can see the family finances become healthier again sooner. Best of all, you’ll be able to restore the family’s happiness— that’s just as important to get right.
For more personal finance tips, you can visit the Wall Street Journal website. Start your journey to freedom from debt.
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