Financial stress is not just annoying; it can be dangerous to your health. When the economic crisis hit, people were caught off guard. Many plunged into financial troubles.
It’s never too late to deal with these concerns. Here are four common money stressors, each with easy, do-it-yourself remedies:
Worry no. 1: Paying off debts
Solution: Perform plastic surgery, then build a cash reserve
If you’re worried about credit card dues, here is some quick advice: Pay off the highest-interest balances first. Consolidate debt as efficiently as possible through balance transfers. The key to financial freedom is to stop depending on credit cards. Whenever possible, use cash exclusively until all credit card bills have been paid off.
Worry No. 2: Savings for a child’s education
Solution: Save $10 a day
The best way to afford college is to save early. $10 per day in a 529 college savings plan can be worth around $150,000 by the time a child reaches freshman year. The average cost of public colleges is $12,000, rising 7% every year while private colleges cost $30,000 a year. If possible, try supplementing a traditional 529 savings account with a second type of 529 plan: A prepaid tuition plan. This plan protects individuals from rising tuition costs by buying future college semester tuition at today’s prices. There are more than 250 member colleges in this plan. If the child ends up not attending any one of the member schools, one can withdraw the principal and its interest, and use it as a traditional 529.
Worry no. 3: Saving for retirement
Solution: Max out a 401(k), but don’t stop there
With the stock market in recovery, now is the time to invest if one has a 401(k). According to the IRS, the cost-of-living for pension and retirement plans for 2010 remain unchanged. This is good news for many who had feared that the limits would be reduced. Each year, in October, these limits are adjusted according to a formula based on the inflation rate in the third quarter versus the previous year’s quarter. For a larger retirement fund, save an additional 10% of your take-home pay. Have it automatically deducted. Invest it in other money-yielding plans.
Worry no. 4: Living beyond means
Solution: Put expenses on a 10% diet
Start cutting 10 to 15% from monthly expenses. Here are some examples:
Mobile phones The average cell phone usage is 422 minutes a month. Reducing allowable minutes from 600 minutes to 450 can save around 10%. Prepaid plans are a better deal for usage below 400 minutes.
Utility bills Older water heaters consume 25 percent of energy. Buying a $10 water-heater blanket can reduce bills by as much as 10%.
Auto insurance Raising a deductible from $500 to $1,000 can save up to 40%.
There are many options for saving and being free from financial worries. Start living a life without debt. Sign up on the form located on the top right to find out more.
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