Just about everyone dreams of financial success, however, they may be at odds as to exactly what that means or how to get there. Being financially stable means your money does not control you, but you are in control of your money. In other words, financial success is determined by your priorities and choices and not your income. If you are struggling financially, chances are, it is time to reevaluate your choices and priorities to include a way of living that drives you towards financial success through Couponchief.com.
Evaluate Your Current Financial Situation
Evaluating your current financial situation will help you discover what you need to do tomorrow. Begin by taking stock of your assets and liabilities to determine your net worth.
What Are Your Assets?
Your assets are any possessions that have monetary value. These possessions could be your cars, houses, furniture, saving and checking accounts, bonds retirement funds, stocks and more.
What Are Your Liabilities?
Liabilities are any financial obligations you have to companies or people, including car loans, mortgages, credit cards, student loans, personal loans and more.
Determining Your Net Worth
To determine your net worth, simply subtract your liabilities from your assets. If the result is positive, it means you have more than you owe. If the number is negative, it means you owe more than you own. Your net worth should be positive and increase over time. If this is not the case, you are spending too much and not saving enough. Try limiting your spending to just necessities.
Set Financial Goals
Determining your priorities is essential. Setting a clear, cut, achievable financial plan will help you decrease your debt and increase your income. To begin, determine how much money is coming in versus how much is going out.
Determine your income. This includes wages, profits and gifts from self employment, investment earnings, alimony, child support, government benefits and rental payments. Your net income is your income after taxes. Your gross income is your income before taxes.
Determine your expenses. Your expenses include necessities such as rent, mortgage, insurance, food and medical as well as things you choose to spend money on. To discipline yourself to save, try setting aside a portion of your savings as an expense. This way, it will be set aside before the money ever touches your hands.
Your expenses should never be greater than your income. If they are, it is time to reevaluate your spending.
Pay Off Your Debt
Debt and expenses can eat up a large portion of your income, not to mention, it can rack up thousands of dollars in interest payments. Paying off your debt and lowering your expenses can help free up money for savings towards your future goals.
Accelerate debt payments by increasing your payments each month. If you have more than one creditor, send extra payments to the highest debt, while continuing to make the minimal payments to all other creditors. Continue this process with each debtor until all debt is paid off.
Another way to lower your debt is to lower your interest rate. This can be done by getting a consolidation loan, asking your creditors for a lower interest rate, transferring your balance to a lower interest rate card, refinancing your mortgage to pay off your debt or participating in a debt management program.