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Tips to Manage Your Finances

Seth Strickland

by Megan Lathrop

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Although a taboo conversation topic at most dinner parties, money affects all areas of our lives. The pursuit of it, as an end in and of itself, is not to be praised but neither is neglect of the subject.

Debt decreases personal freedom, diminishes opportunity and limits our ability to invest in others and ourselves. Dealing with finances and debt can be daunting, but there are proactive measures that can be taken to actively reduce this stress.

Follow six tips to help you get started.

1. Find out where your money is going. Using credit cards on a regular basis can make it easy to lose track of money. Consider using an online service like Mint.com or Hello Wallet  that allow you to view your spending habits and set financial goals. They also have mobile apps that allow you to track your cash spending, so you won’t lose track of how much you spend buying coffee or feeding the meter.

If you need something more tangible, create a budget and put cash in labeled envelopes. When the envelope is empty, you know you have spent your allotted money for that expense.

2. Review your spending. What areas do you go over budget on regularly? Are there hidden expenses that you haven’t accounted for that are chipping away at your margin? Are there things you can go without? Watch out for bank fees, regular charges from subscriptions that you no longer use and duplicate expenses that can be eliminated.

3. Call each credit card company. Ask them to lower your interest rate. About 50% of the time they will. It is worth asking, as every bit helps when you are paying off debt. Use credit cards that have no annual fees and, when you can, 0% interest rates. When possible, consolidate debt onto the lowest interest-earning card possible.

4. Set up auto pay for your monthly bills. We are emotional beings, so removing subjectivity from these matters will increase our chances of reaching our financial goals. Automate the important items to ensure they get paid on time. If your employer provide direct deposit, set up a rule to have a percentage of your paycheck go automatically into a savings account. If you never see the money, you will be less likely to spend it.

5. Plan ahead for tax season. If you have an accountant, schedule a meeting with him or her to discuss your financial goals for the upcoming year and to discuss your estimated tax payment. Don’t wait until March when tax season is in full swing. If you manage your own finances, set aside a weekend in January to review your 2012 records and estimate your annual tax payment. This will ensure that you are prepared for these expenses come April.

6. Get Professional Assistance. If you don’t have a financial planner, consider seeking one out to assist you with this area of your life. There are many great financial planners across the country. The financial world has many complexities but a professional can help you get control of your spending and plot a course to reach financial goals. Check out www.CFP.net for a Certified financial planner in your area.

Living without debt furnishes us with resources to live a more deliberate and productive life.

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 This post is a reprint from the inaugural Issue no. 1 available in our store  and in the iTunes store. For more excellent, helpful, and thoughtful content like this and so much more, subscribe today.