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Friday, 14 August 2009

5 Tips To Survive a Financial Crisis

There's no doubt about it. We are living in very uncertain times with the world's financial credit crisis.

But what about your personal finances?

If times get really tough can you survive a financial crisis?

Now's a good time to do a reality check and start preparing.

Here's how.

1. Budget. Talk to any financial adviser and they all agree on one strategy- we need to have a budget.
A budget shows you where all of your hard earned money is going and balances our expenditure. It's an excellent tool to control the spending, pay off debts and save money.

There are many websites that provide free Budget Planner to calculate your total income and expenses or just draw one up yourself.

2. Reduce Debt. Write down all your debts and start paying them off as quickly as you can. If you become unemployed you won't need the extra stress of having debt. Paying off your debt may mean tightening the belt by cutting down on spending but it will be worth it.

Pay credit cards off in full each month. If you are unable to do that, try not to spend anymore on the card and pay more than the 'minimum payment' each month. This will cut the time it takes to pay off the credit card and save a fortune on interest.

3. Reduce Your Mortgage. Making additional repayments will slash interest costs and reduce the term of your loan. Find out if your loan allows you to make additional repayments without penalty. If not, it may be worth finding a better home loan so that you can keep your money in your pocket not the banks.

4. Reduce Your Bills. Re-access all accounts such as your bank accounts and credit cards and cancel any you're not using so you're not paying unnecessary fees. Search for cheaper energy, insurance and deals on phone plans.

Set a limit on how much you will spend on groceries and shop with a list.

Limit takeaways such as buying coffee every day, lunch and dinner. Take coffee to work and apply this to lunches too - you'll save thousands more.

5. Set Up An Emergency Fund. It's important to start an emergency fund if you haven't already. Begin doing this as soon as you have paid off all your debts.

An emergency fund is like a parachute - ensuring your financial survival.

Firstly experts recommend having a $1,000 emergency fund then increasing it to 3-6 months of expenses.

Start saving by opening up a high interest bearing saving account, then set up an automatic transfer so that each payday some money is saved - before you spend it.

Follow these tips and you will be better prepared when times get tougher.
Reference : web


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