One of the main areas where the majority of people can make some improvements is their finances. Sadly, many households are living from paycheck to paycheck.

They have bills coming in and their money is really spent before they get that check in their hands.

They often rely on credit cards to pay for extras they want. They can buy now and pay later, over a period of time.

Yet the interest adds up and the end result is less disposable income for the household. Taking a good look at your finances is very important.

With the economy being tough right now, it is more important than ever to spend money wisely.

Communication

Money seems to be the #1 issue that causes tension and arguments in many households.

Not enough money to go around, money being spent on things the other partner doesn’t think it should, and too much debt can make it hard to focus on what is really important.

Talking about finances can be tough but open communication is important.

Being on the same page as your spouse when it comes to spending habits, identifying the income and debts of the household, and making a plan of action is important.

Both parties should have an allocated amount of money that they can spend each month on anything they want. This doesn’t have to be a large sum of money.

The idea is for each of them to have some control over personal spending and a bit of indulgence if they would like.

Budget

Setting up a household budget is very important. On one side of a sheet of paper, list all of the monthly income.

If the pay amounts can vary from month to month, identify them on the lower side.

This ensures that the budget will cover the expenses if the least amount of money is earned.

If there is more money earned, then more can go into savings or to pay down debts.

On the other side of the paper, write down monthly ongoing expenses.

This includes rent or mortgage, vehicle payments, vehicle insurance, utilities, groceries, and other items that you will need to pay for month after month.

Below that, make a list of unsecured debt that you can pay off. This includes medical bills, dental bills, and credit cards.

Subtract your monthly debts from your income and that will determine how much you have left over to pay on your unsecured debts.

Before you pay for them though you need to have some money allocated for savings and for retirement.

An emergency fund is important so that if you lose your job you are able to pay your bills until you get back to work.

You may be saying that you have quite a bit of money left over each month on paper, but not in reality! So where is all of the other money going?

This is important to track. Spend a few weeks writing down everything you spend money on, and if you have a partner they need to also.

This includes every cup of coffee you buy. Don’t let anything slip through.

After a couple of weeks, add up those expenses.

It may surprise you to discover you are spending a huge chunk of money each month on eating out or other expenses that you can cut down on.

Once you know where your money is going, it is much easier to get a budget worked out that keeps you within certain boundaries.

If you find that you are struggling to work through a budget successfully, there are programs that can help.

Many locations have free classes for money management and for one on one budgeting help. It is a good idea to sign up for such services if you need them.

If you have a partner, this should be a joint effort for both of you to attend.

Pay Off Debts

Your unsecured debts are going to take a huge toll on you financially.

Paying only the minimum due each month, it can take years to pay off even a small balance on a credit card.

Once you have your budget in place, you can work hard to pay off debts. This is a great choice when it comes to self improvement actions.

In order to do this, you need to reduce expenses as much as possible. If you are still in a crunch, you can consider ways to increase your income.

Make a list of all the unsecured debts that you owe and what the current balance is. Next to each item, write down the interest rate.

Take the time to call each of the accounts and ask if the interest rate can be lowered. You will be surprised at how many creditors will do this if you ask them.

They aren’t going to offer it on their own though! If you get such approval, document who you spoke with and the date.

Ask them to mail or email you a copy of the new terms.

If you don’t receive it within a week, contact them again for that information.

You need to make sure you have something tangible that spells out the new terms and the lower interest rate.

If you don’t owe much on an unsecured debt, they may be willing to take a lump sum to pay it off.

For example, if you owe $1,500 to a creditor they may be willing to drop it down to $900 if you pay it in full. If you are able to take advantage of such offers do so.

If you don’t have the funds right now, keep it in mind.

We will cover increasing your income, and then you may be able to contact them again once you have funds saved up to work with.

In the meantime, list your unsecured debt in order from highest interest to the least.

People often list it by dollar amount but that isn’t the way to do it for proper self improvement.

By paying the one with the most interest off first, it gives you more money to use towards paying the others.

As soon as you pay off one high interest unsecured debt, work on the next one.

In addition to the money you currently pay on it, add the money you were sending monthly to pay on the one you just paid off.

Continue with this method until you have them all paid off.

As you get more disposable income to work with, you will find that you are able to pay them off faster and faster.

It is paying that first one off so that you have more money to work with that takes the most time.

Another option to consider is unsecured debt consolidation. However, there are some red flags with this method that you need to be well aware of from the start.

First, you need to know that there are scams out there. They know people are in need of money and they may take advantage of that.

You shouldn’t ever have to pay fees in order to fill out an application for debt consolidation.

Second, this type of self improvement process is only going to work if you are committed to it and you change your spending habits.

If you consolidate and then start to buy lots of things again on credit, you will end up in a worse financial bind.

Not only will you have all of those monthly payments again, you will also have a payment for the loan consolidation on top of them.

Paying off the debt with loan consolidation can work if you are careful about your spending habits from that point on.

In order to determine what the benefit would be, use free online calculator tools. Simply enter the data that pertains to your debt.

This includes the balance, the interest rate, and current minimum payment.

Once you have entered such information, you can use a comparison by entering the consolidation information.

This will be the total of all of the unsecured debt you are adding into the loan and the current interest rate that the lender is going to offer you.

This will show you the overall dollar amount you pay with interest and your monthly payment.

Typically, the monthly payment is going to be less than you are paying right now by paying each of those debts individually. This is due to the lower interest rate.

You should be able to pay off the debts in less time too.

If you are able to do so, pay more than the consolidation loan requires of you each month and that will further slash your interest and timeframe.

It is important to make sure there isn’t any type of penalty for prepayment on the account. Don’t apply with a lender that charges such fees.

Take your time to explore various offers and to evaluate what they provide you with. The interest rate is important but there may be other fees they add on.

Always take the time to carefully read the offer and to make sure you understand the terms and conditions.

Evaluate lenders too by reading reviews online and checking their reputation with the Better Business Bureau.

Invest

It is important to invest money to help you prepare for the future. Wise investing means your money can grow.

There are plenty choices when it comes to investments, but make sure you diversify your portfolio. You don’t want to have all of your money in the same types of funds.

By diversifying, you can have a safety net in place. Even if you incur some losses, you will also have gains.

Investing wisely is important, and what you should do really depends on how close you are to retiring.

If you are in your 20’s and 30’s you want to be more aggressive with your risk involved in investing as those have the highest returns.

If you are in your 40’s and 50’s you want the risk to be moderate. As you get into your 60’s you want virtually no risk.

The most common type of investing is through your employer with a 401(k) program.

The best part about this is that the money comes out of your paycheck before your taxes. As a result, it can lower your tax bracket.

Second, most employers are going to match the funds you invest up to a given amount. This means you get free money.

To make the most of that option, try to invest the maximum that the employer will match.

With a 401(k) your money may be diversified within various stocks, bonds, and mutual funds.

You should get quarterly statements that show you where your funds are invested and the return or loss for that previous quarter.

If you aren’t sure how to read those statements, get help so that you can fully use that information that is being provided to you.

If you are self employed, you still want to invest and the best way to do that is through an IRA.

There are various rules that apply regarding how much you can contribute per year. It is a good idea to find out what these limits are and to determine how you will invest early on.

Another choice to look at is investing in gold. It seems to always hold its value, even in tough economic times.

If you have the time to dedicate to it, real estate can be a sound investment.

For example, a home, commercial property, or even an apartment building that you can rent out.

If you get involved with real estate, you have to be well informed about what your obligations are going to be. You will be responsible for the upkeep on the property.

If a water heater goes out, you have to pay for it, not the renter.

With that in mind, you have to be able to get enough for the rental to pay for the mortgage and to put funds aside for emergencies.

There is also the cost of insurance and taxes.

However, as the property increases in value, you will be able to charge more rent for it. At the same time, over the years what you owe on the property will decrease.

Once you have it paid off, more of what you get from the renters will be considered your profits.

Real estate investing works best if you start it at an early age or you have a large sum of money that you can use to buy property.

Try to buy property in a location that has good value or that has a very good opportunity for growth and value to occur.

You don’t want to end up with property that you can’t rent out. You also need to be very selective in terms of who you rent the property to.

If they tear it up, they don’t pay the rent, or they leave it a mess when they move out then it can cost you lots of money.

A solid contract between you and the renter is very important.

It should list all of the people that can live there, the monthly rent amount, and all the other terms and conditions you would like them to abide by.

Take the time to do a background check and a credit check on a potential renter too.

This will ensure that they do have income, they seem responsible with paying their bills, and that you have a quality individual renting from you.

Working with a financial planner is a good idea if you want to make self improvement in the area of investing.

They can help you to evaluate your current savings methods for retirement and take into consideration your age, income, and the type of lifestyle you wish to enjoy in your golden years.

Based on such information, they can provide you with the options to consider.

A financial planner is a low cost expense when you consider the value it provides. Don’t just put your money into a savings account.

While it will earn interest, what it earns is very small compared to investing options available to you.

The idea is to help your month grow so that you can make more for the future with what you put aside now.

Start a Home Based Business

A home based business can be a wonderful way for you to increase your income.

That money can help you with self improvement by providing you with the cash you need to pay off debts in less time.

There are quite a few choices you have that fit this category. You don’t need lots of money or even lots of inventory to make it work.

• Freelance writing
• Website design
• Consulting
• Childcare
• Tax preparation
• Crafts
• eBay

There are plenty of online sites where you can get paid for writing. This includes articles, blogs, reports, and even educational papers.

If you have experience with website creations, you can design them for other people.

Perhaps you have experience in a specific field such as marketing and you can offer consulting services.

The need for quality childcare is very common, and this may be a great way for you to make money from home.

You will need to check into your local laws and regulations about licensing.

If you have knowledge in the area of tax preparation, you can make some additional money helping others to get their taxes done is a great service.

You may need to be licensed in some locations but you can usually take a class and become certified within a couple of weeks.

If you enjoy making various crafts, you can do so at home. You can sell them online or you can sell them at local craft shows.

Many people enjoy finding unique items that not everyone else has.

Since you already enjoy investing your time with such projects, making money from them is going to be a great perk.

There are plenty of consumers looking around eBay for a great deal. This is a wonderful place to sell items on a regular basis.

You can go to pawn shops, estate sales, and look for sale items so that you have great new and used items to list on eBay. Some of the top selling items include:

• Electronics
• Watches
• Clothing
• Collectibles
• Car parts
• Jewelry
• Holiday/Party decorations

Consider Alternative Income Streams

There are some alternative income making methods you can incorporate too. For example, you can put up fliers that you will do housekeeping and yard work.

As people call you, go see what they need done, agree upon a price, and complete the job. Many of them will ask you to do the work on a regular basis.

Dog walking and pet sitting can be a wonderful way to make sure you get exercise and that you are able to make some additional cash.

Talk to your friends, family, and neighbors to see who can benefit from your offer of such services.

Getting a second job that is part time may be a way for you to make more money to pay off your debts.

During the holidays, many retailers are hiring more people to cover the demands.

Working extra for those few months can help with your self improvement goal of paying off your debts.

You can also get a part time job to work on the weekends. Doing so will help you to make money that goes directly towards paying on your debts.

If the weekends are typically a time when you are enticed to spend money on going out, then working will also help you to reduce your expenses.

Sell Assets you no Longer Need

You may have items around your home that you no longer need. If you are paying for a mini storage, go through it.

Get rid of what you can so that you can store the rest at home. Eliminating that monthly storage expense means more money available to pay off your debts.

Go through each room of your home and identify what you can sell that you no longer need.

This includes clothing and shoes that people have outgrown or they don’t wear. Furniture, jewelry, jackets, and appliances you don’t need can all be sold.

You can list them on eBay or even have a garage sale.

If you have vehicles you no longer drive, sell them. Even if they need repairs, you can get something for them.

If you aren’t sure of the price to put on such items, look around online and get some prices that are offered with other similar items that people have for sale.