How To Plan Financially for 2021


Money matters. After an overindulgent Christmastime of giving, January is often the time that people tend to tighten their belts to make up for the money that had been spent in the previous months. 


After a challenging year, some of us may have used the holidays as a time to ‘let loose’ a little more. But that means having to take control better now before these overindulgences become habits and cause some serious financial issues. 


Financial issues are more common than you’d think, but that doesn’t make their impact any less difficult when they hit. 


Debt is one of the taboo topics that most of us don’t want to think too much about. Debts are not compared with our gal pals in the same way we compare our kids milestones or latest interior design projects.
No, debt is rarely spoken about. It is a noose of shame held around our necks- and speaking about them can feel like we’ve visited the priest for confession. However, debt is not one of those things that go away if they are ignored. 


In fact, the less debt or other money management issues are dealt with, the more they will cause problems in the future. Not only that, the sheer amount of interest generated from unpaid debts can cause a whole host of issues later down the line. 


So, how can you start to deal with money matters to get your 2021 off to a more financially healthy start and to save toward the things you want? 


Here are some tips you should follow to keep you on track. 


What are debts? 


Simply put, a debt is when money is spent that did not belong to the spender. It can come in an assortment of forms and as a result of many different circumstances. Most commonly they can look like student loans, medical bills, credit card bills, car repayments and mortgages. 

If these things are ignored they will mount over time, causing stress, anxiety and extra worries as a result. 


Debts are a taboo topic because nobody likes to appear as though they are out of control. But staying silent about money issues and not seeking help will not solve them. 

When you’re in debt, it can often feel like it’s something that will stick by you forever. In a way, unmanaged debts stick around for a while when it comes to looking at your credit score and getting credit in future.  


This is why you should consider taking some of the following steps to help you to get away from the shackles of debt and start to make your way towards financial freedom. 


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Speak With Your Creditors 


When it comes to managing your finances, communication is key. The first port of call is to work out who your creditors are. It’s the same as overcoming an issue by acknowledging that there is one to begin with. 


People fall into debts for a whole manner of reasons, and some of them are not of the fault of the person. For example, if you usually arrange for a bill to be paid on a certain day of the months and you change jobs, this can mess up the natural rhythm of the payment cycle. 

This alone is a common reason that people fall into debt. 

Other changes of circumstances include moving home, having to care for a family member, or falling sick. 


It is therefore advisable to speak with those you owe money to as soon as there is a change of circumstances which could result in a missed payment. 


Your credit card company may not be your best friend, nor your utility supplier, but they shouldn’t be your enemy either.


It is their job to collect the money that is owed for a service that  they have provided. After a while they will do anything to get that money back, which is when having debts becomes even more scary. Not paying debts can lead to circumstances that will damage your credit rating and could lead to court action and/or forcing you to have to file for bankruptcy. 

Communicate with your creditors especially if you’re struggling with finances and there is a high chance that they will work with you to come up with an agreeable and manageable repayment plan. When it comes to managing your finances- there’s no such thing as over communiciating. 


Speak with Debt Lawyers and Counselors  


If ignored, failing to repay debts can become a legal issue. As previously mentioned, your creditors are within their rights to threaten court action should the debts remain unpaid. 

Act first. 

You may be able to find support from a local debt lawyer or counselor to help you to manage the legal side of dealing with debts. They will take your individual circumstances into consideration and will help to alleviate any of the stress that may come from lawsuits and potential harassment from creditors. 

It’s the job of a trained debt counselor to help with the emotional and physiological impact that debts can have on an individual. They offer support and advice with how to manage debts, advice on how to approach creditors and how to manage your money.

They will discuss your financial situation with you and help you to come up with a personalized plan to help you to manage and eventually clear your debts. In addition, they may help you to create a budget, and helping to source education programs designed around money management. 


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Have a Credit Check 


Knowing your credit score will help to determine whether lenders will allow you to take out a loan. Some companies will allow you to check your credit score for free with no impact on your rating. 


One thing to be aware of is that lenders will only give loans to those they are confident will be able to pay them back, which increases the need for a credit check during an application for a loan. 


Your score can be affected by things that may not be your fault- check each item within the report to ensure that nothing has been added in error. You can argue against anything in the report that you are sure doesn’t belong to you. 


Work on Improving Your Credit Score 

If you want to secure any credit at a later date, you will need to improve your credit score. Using a credit card properly will help you to build up this score–but improving your credit score can seem like an impossible task when you have limited credit. 

Some simple ways that you can work to improve your credit score over time: 

  • Set up an auto payment for your credit cards, so you never miss a payment- missed, or late payments will often result in extra fees that you don’t want to be dealing with.  
  • Never go less than 60% of your credit card limit- set alerts for when your limit is getting low. 
  • Pay some regular payments through your credit card, such as your phone bill and pay them back within a few days of paying your bill to bring your balance back up. 

Build Equity 


If you own your home, then there is a very big way you can work to improve your financial situation- your home. Building equity in your home is incredibly important. Since it is considered an asset, doing so can help to finance big things such as your retirement fund, college education, or a house remodel, for example.


There are some ways in which this can be done quickly. One is to pay more than you have to in extra mortgage payments. An example would be to increase your $1,000 monthly payment to $1,500 per month. Or if that’s not possible, one additional repayment per year. Just make sure to speak with your mortgage lender to put that extra money toward the principal loan.

Doing so will help you to build equity faster, pay off your mortgage more quickly with the potential to save hundred or thousands of dollars in interest, 

Don’t live beyond your means 


The best way of managing your finances and staying out of debt is to live within your means- never beyond. 

This may involve making some financial sacrifices such as shopping around for cheaper alternatives for everyday expenses such as groceries, or cancelling that subscription service that you only ever use to watch one show. 


Short term sacrifices will always lead to long term financial gain, which is becoming increasingly important as days go by. 


Create a budget that has room to maneuver and that will allow you to live your life comfortably while working towards your financial goals. 


Everybody has to deal with their finances. And being in a tough financial situation can be incredibly isolating.

While you may feel as though it is impossible to get through, know that there is help available to prevent things from getting worse than they need to be. Don’t try to handle your money issues alone– Always seek help when you need it. 


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