When you hear the word “detox,” you probably get images of pungent vegetable smoothies in your mind. Detoxing isn’t just for your waist line or your complexion, though. A lot of people like to work through a money detox in an effort to get closer to financial freedom. Break bad habits and start to free your life of financial troubles by following these ten steps.
1. Check your credit reports. Every year, you can access all three of your credit reports for free. Go over them to make sure all of your personal and financial information is accurate. If there are any inaccuracies, report the mistakes to the credit bureaus. Sometimes improving your credit score is as simple as pointing out a mistake on your report.
2. If you have debt, odds are that creditors are routinely calling your cell phone. Don’t ignore these phone calls! Instead, talk to them to work out a payment arrangement – you’ll be surprised at how much wiggle room they have with due dates and payment amounts. In the end, most creditors will workout a payment arrangement you can realistically stick with.
3. Resist the urge to sign up for yet another store’s credit card, which will likely come with a much higher APR than a basic credit card. Plus, you’ll be limited to shopping at specific places, when you could possibly find lower prices and better deals elsewhere. If you do put a purchase on a store credit card, try to pay it off as soon as possible.
4. Dedicate time every week to organizing your finances. It’s much easier to maintain everything throughout the year than to have a mess to deal with during tax time. This is especially important if any of your work is freelance, because you’ll have to keep close track of your business expenses.
5. Keep track of what you spend money on and how much you spend. This is a good thing to do even if you have a pretty wide open budget. Knowing how much is going where will help you to think twice before eating lunch out for the fourth time this week or buying another $6 latte tomorrow morning.
6. If you want to purchase a luxury item, wait until you have the cash to do so instead of charging it. Otherwise, a $500 purchase can end up being $1,000 or more by the time you’ve finished paying it off.
7. Avoid impulse buying by following this golden rule: When you want something, tell yourself that if you’re still thinking about it in two weeks, you’ll buy it then. You’ll be surprised at how many items don’t seem as appealing after a little bit of time goes by. Plus, you’ll feel confident when you do end up spending money on the things you truly want.
8. When it comes to savings, abide by the “10-10-10” philosophy. Put 10% of your income in a short-term savings account (vacation, holidays); put 10% in an emergency and necessities account (new car, appliances, home repairs, college); and put 10% in a retirement account.
9. During the holidays, or even around birthdays, buy presents with cash instead of credit cards. You’ll end up spending 20% less than you would otherwise, according to FoxBusiness.com.
10. Automate your finances so that money goes where it needs to before you get a chance to spend it. Set up your bills to automatically deduct from your checking account, get direct deposit so your paycheck never makes its way to your hands and have a certain percentage of money moved into your savings account every month.
About the Author: Rachel Eagan is a professional blogger that shares financial advice and information to consumers. She writes for TitleMax, a title loan company that provides no credit checks car title loans and title pawns.