The narrative from the start of kindergarten was, “Get good grades and life will be OK.” Life may, however, throw a couple of curveballs that school didn’t quite prepare you for. Sure, you might land that dream job, but there’s stuff like student debt, mortgages, and general everyday expenses to cater to. All of a sudden, your goal of financial stability starts to seem like a pipe dream.
Fortunately, there’s a silver lining to the situation. Achieving financial stability is, well, achievable. By following the steps below, you can set yourself on the path towards less debt and, ultimately, financial stability.
Clear High-Interest Debt
High-interest debt may be defined as any amount of debt that accrues an annual interest rate of 7.5 percent or higher. Nowadays, the most common type of high-interest debt is credit card debt, which carries on average, a 17 percent interest rate. In the U.S, the average household has $15,956 in credit card debt, making it a considerable burden.
The only way to get around the issue of credit card debt is to start paying it off. Commit a certain amount of extra cash each month to cater to the highest interest rate cards then continue paying the minimum on the remaining cards. As you do so, remember to cut out using your cards. If you must use a credit card, then request for a lower interest card from your card company.
Invest for When You Retire
As distant as it may seem, there will come a day when you’ll have to bid farewell to the working world. If your employer offers a 401(k), then good for you. If not, then consider opening an Individual Retirement Fund (IRA). Putting some cash aside for when you retire is one of the smartest moves you’ll ever make, and the earlier you start, the better.
Establish a Buffer
The idea behind establishing a buffer is to have enough money in your checking account that amounts to two weeks’ pay. This amount is one average between $500 and $800. When putting aside this amount, picture it as untouchable and never allow your account balance to fall below it. Building this buffer not only saves you from expensive overdraft fees but also gives you a nice cash cushion.
Put Something Aside for Emergencies
The best way to stay ready for life’s nasty surprises is to come up with an emergency fund. The ideal place to store such a fund is in a high-yielding savings account insured by the Federal Deposit Insurance Corporation (FDIC). The major pro of these types of accounts is that they pay rates that are 20 times as much as your local bank. Remember to keep your emergency fund separate from your main bank account to avoid the temptation of needless withdrawals.
Get an Extra Source of Income
Your 9-to-5 might be a sufficient source of income, but since your aim is financial stability, you might want to look to some extra income streams. Consider selling your services on a third-party site, starting a blog, or even selling stuff online. You could also pick up an extra shift if your schedule allows.
Financial stability might sound like something reserved for the rich, but it is achievable. With the right steps, you’ll manage to get there. If you are looking for a solution-based partner to help you achieve your dream of financial stability, consider Alleviate Financial for advice on how to ease your financial debt stress.