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Are You Financially Fit?
by Joan Peterkin
Published on this site: March 29th, 2006 - See
more articles from this month
Are you financially fit? If not, can you become financially
fit? What does it mean to you to be financially fit? Financial
fitness is very personal and can only be determined by you.
Just like your physical fitness your financial fitness is
as important and should be as equally high on your list of
things to do. The strength of your financial fitness contributes
your physical fitness also.
Financial fitness starts with debt management. Do you have
a debt problem? Do you have high interest, unsecured revolving
debts? If you do, this is the first place to start on your
journey to financial fitness. Reducing, controlling and eliminating
these kind of debts will contribute greatly to your fitness
journey. Eliminating high interest credits cards debts will
turn off the tap which has your cash going down the drain.
There are several ways to reduce your debt. First, debt reduction
must start with purpose and benefit. You must determine why
you want to reduce your debt. How will you benefit from having
a reduced debt load and what impact will these benefits have
on your quality of life, long and short term. By knowing why
you want something and how you will benefit from having it, is
part of "psyching" up yourself. You become emotionally
committed to the task and are willing to see it through. Now,
you can create a plan which works for you and helps you to
achieve your goal.
Get started by recording all your debts. This lets you know
where you are now. Decide when you would like in a better
financial place. Get started and track your progress.
Consolidate your debts to a lower interest rate - you can
ask your bank for a consolidated loan. This loan should be
an amount enough to pay off all your credit cards, personal
loans and line of credits in full. Try to negotiate the lowest
interest rate possible. Remember the interest rate you qualify
for is also determined on how creditworthy you are.
Another option is Independent Debt Management companies who
specialize in helping middle income consumers choose a debt
management process that is best for them, often at a lower
cost than the banks. Do your research and find one who fits
your needs.
Now, get rid of all your cards except one. The one you keep
should offer the best interest rate and annual fee. You should
only use your card for emergencies while you are on this journey
of financial fitness.
Refinance your house - By using the equity in your house to
pay off your credit cards, student loans and personal loans
will help you to qualify for a lower interest rate. Your high
interest debts are now secured by your home. You are now paying
less in interest and your monthly payments made on your debts
are reduced.
Protect your credit rating - If you do not qualify for a consolidated
loan or you do not have a house with equity for refinancing,
all is not lost. You just have to make a decision to become
debt free on your own. Become disciplined with yourself and your spending. Develop a debt free plan that works for
you.
You can start by listing all your debts in order of amounts,
interest charged and balances. Call all your lenders and ask
them to reduce your minimum payments requirements, they will
be very happy to help make your payments easier.
Now that your monthly minimums are lower, you will have increase
cash flow to start the "paying off process".
By paying off your lowest balance first, then the second lowest
balance, then the third lowest. As you pay off each card,
you can add that payment to your next card. With this process
you will see results quickly and you will be more encouraged
to continue. Reward yourself with a non-credit gift each time
you pay off a card. You have earned it!!! Track your progress
and before you know it, you will become debt free!
Now your disposable income can do more for you. You are back
in control of your cash flow and should be able to re-direct
it to saving for emergencies, retirement, vacation, new home,
gift, education.
Track your spending on everything: lunches, coffee, clothes,
dinners, entertainment, gifts, all your wants and "must
haves". Look for areas where you can make creative cuts.
Small cuts can make a big difference. Use only one credit
card and try to pay the full balance each month.
You can and should make your financial fitness a priority
at all times. Your financial fitness contributes to your physical
fitness, your current lifestyle and future security.
Joan Peterkin.
Joan Peterkin is President and Founder of Wealth Initiators
Inc., providing a fresh approach to financial freedom that
gives families a better understanding of their financial choices.
Joan helps families, in Ontario, Canada, transition from being
in debt to building long-term wealth and financial security.
Get her free report "The Top 7 Reasons to Live a Debt-free
Life" by sending an email to: mailto:[email protected]
. For more information, visit Joan's website at http://www.WealthInitiators.net
or call 416-497-6786;
toll-free: 1-866-410-6099.
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