Have a look at the below given financial tips for the 4th week of June 2011
Tip no 1 - Check your insurance coverage so that you don't pay for what you don't need
It is crucial to check your insurance coverage to avoid making unnecessary expenses. For example, if you keep your car in the garage for a considerable period of time, then you can opt for comprehensive coverage only. There is no point in opting for collision or liability coverage. Your car is less likely to get involved in an accident as it will be stored in the garage for most of the time.
If you already opted for full coverage auto insurance, then you can contact your insurance agent and request for a drop in coverage. The same thing is applicable for the other insurance polices.
Tip no 2 - Distinguish between needs and wants and learn to prioritize your needs
One of the best ways to avoid getting into debt problems is to spend according to your needs. Human beings are greedy by nature. They have a never ending wish list. They want more and more. This explains why maximum people incur debts in their life time.
You may wish to purchase all the items when you go to the supermarket. But you need to decide about the items which you really need. Try to avoid purchasing the items which you can easily do without.
Plan a suitable budget and follow it. This will help you locate the areas where you can save money. You can use that money to purchase one of your favorite items. But don’t make it a habit.
Tip no 3 - Consider refinancing your mortgage loan if you're paying more than the current market interest rate
Refinancing helps you manage your mortgage debts comfortably. It helps you cut back the interest rates on your existing mortgage. This in turn can help you reduce the monthly payments. The money you save on your mortgage can be used to repay unsecured debts. You can use the money to make extra payments on your other debts. This will help you get rid of debts sooner.
However, if you don’t have sufficient equity in your home or have low income and credit score, then you may not qualify for refinancing. So, make sure you have decent credit score and low debt-to-income ratio.
Tip no 4 - Contribute to a Retirement Plan - 401k or IRA
If you want to secure the golden years of your life, then you need to make contribution to the retirement accounts regularly. You should start contributing to the retirements accounts in your 20’s. This is because you can make maximum contribution to the retirement accounts during this time period. Try to avoid withdrawing money from the retirement accounts even when there is a financial emergency.
Try to accumulate as much money as possible in your retirement account. This will help you meet your expenses post retirement. You can lead a happy financial life without needing financial help from your children or family members.
Tip no 5 - Try to pay off your debts and save money at the same time
You should always try to repay your bills and save money simultaneously. You should keep aside a sizeable portion of your wage each month. Contribute that money to the emergency fund. Create and follow a suitable budget. Budgeting will show you the areas where you can potentially save money. If you are not able to create a budget on your own, then you can use personal budgeting software.
Make sure you pay your debts on time. If you have the habit of forgetting dates, then you can opt for online payments. You can also mark the payment dates on your calendar.