6 Common Financial Burdens … and How to Shed Them

Posted

For some people, money never seems to be a major problem: They make it, spend it and save it—all without ever falling off track. But guess what? Those people are few and far between.

The reality is that plenty of us regularly worry about money. And when it comes to reaching major financial goals—buying a home, sending kids to college or even having kids at all—things like credit card debt often stand in our way. Now does that sound more familiar? If you’re in the always-worried-about-money camp, take a deep breath and keep reading. With the help of LearnVest Planning Services certified financial planner™ Nancy Anderson, we’re tackling six of the most common financial burdens—and how you can work to overcome them.

Burden #1: You Feel Like You’re Never Going to Pay Down Your Debt

How to Shed It: “The first thing you need to do to get out of debt is stop the bleeding,” says Anderson. “Many people still use credit cards and still try to take out loans.” Anderson’s advice: For a couple of months, stop using your cards as much as possible, and start paying the minimums on them. Regularly paying the minimums will help you to grasp the idea of living on what you’re making, she explains, adding that once you’re able to live within your means, you can then concentrate on paying off the debt on the card with the highest interest rate. When that’s paid off, work on the one with the second highest rate, and so on.

RELATED: Debt 101: Everything You Need to Know

If you have any money left over after paying the minimums, Anderson suggests building an emergency fund. While you may be inclined to pay down your debt faster, if you don’t have an adequate emergency fund, you could be tempted to rely on credit cards again to cover any unforeseen expenses.

Burden #2: You Feel Out of Control When It Comes to Your Spending

How to Shed It: To build better awareness of your spending tendencies, Anderson recommends adopting a daily “Money Minute,” in which you take 60 seconds to see how much you’re spending—and how much you have left. This daily check-in will help you to stay accountable in relation to your monthly budget.

RELATED: How to Avoid a Downward Spending Spiral

The next step is to figure out your spending triggers—and put measures in place to thwart them. “Plan for the spiral,” Anderson says. “If you know that your inner child loves to shop, set up a special splurge ‘shopping’ account that’s linked to its own debit card.” Once that money is gone, your shopping is done until next month.

  • Education 4 Children

    These are true and very helpful.

  • Mimi

    Oh, my gosh. Such wonderful advice! Thank you!

  • Camika Lopez

    Great Advice! Thx! :)

  • Jeannie

    What do you think about the alternative ‘snowball’ approach to paying down credit card (or other) debt? Pay minimums on everything, but pay off the smallest first with any extra you have. When the smallest is paid off, throw that amount plus the minimum you were already paying at the next smallest. And so on. We’re doing that and it looks like we’re actually making progress: I love the green zero-owed line I made in my spreadsheets, and seeing it spread to other big balance cards.