Learn Financial Literacy
Financial literacyis realizing that not all debt is bad. Divide your debt between good debt and bad debt. Focus your attention on paying off the worst of your debts first. If you are paying off two cards, say an American Express and VISA card, find which one of these has the lowest interest and pay off your highest interest card first. At a certain point, you will want to switch over to paying the lower interest card when you have the high interest one mostly paid off. Break out the calculator and find out which one of these is costing you the most per week. It will take some number crunching, but the money you save will be well worth it. Always be careful to read the fine lines on your credit cards.
Divide what you spent last year into wants and needs. Everyone has heard this before, but many people don’t take the time to actually apply this simple concept. Sit down with your checkbook or bank statement and create two columns on a piece of paper. Actually write down and see what you are spending on want and need items. We have all heard cutting out coffee from our lives could save a great deal of money, but did you actually realize a $5 coffee per day means you are spending $1825 per year? How much is that cutting into your yearly budget? If you just can not go without your morning coffee, find another way you can save on this expense or look at what others expenses you can cut out. Can you brew at home? There may be many ways to save on your expenses. Financail literacy will help focus on the right things, the things you need.
Knowing your credit score and report are important. This one little number determines how much you will pay on many of your debts. You can always check your credit score at www.freecreditreport.com. Clear up any errors you find and identify your problem areas. It is possible you have been suffering a bad credit score from an error on your report. Always monitor your credit score to be on the lookout for identity theft. It is a rising problem that affects many Americans and can plague you with unnecessary problems.
Financail literacy means a periodic review of your insurance – car, health, life, renters or home – might save you quite a bit of money now and in the future. My husband and I had the same auto and home insurance provider for over 30 years. You would think that as long time customers demonstrating this kind of loyalty we would have been receiving the very best rates available – think again! In fact, we even found a number of errors in our coverage that could have cost us a great deal of money.
When a family friend challenged us, hand in knee, to review our insurance, he found we were receiving a discount for a sprinkler system we did not have. If we had a fire we could have had the claim denied because we did not have a sprinkler system. Imagine how much extra that could have cost us? In addition, our friend found a number of different premium discounts we were eligible for, but not receiving, we had no idea! In the insurance business, if you don’t ask for discount premiums, you will never get them! We saved a good chunk of money each year by doing this simple review. Get new quotes to make sure you have the best deal available.
Sharon Lechter can help you, step by step, in Literacy in your Finances
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