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Financial peace of mind during tough economic times: Feature Article

The economic crunch we are in has left many people feeling really insecure about their finances. They are worried about making ends meet, and are not sure what the economic downturn is going to mean to them financially. We know where the market has been, but nobody truly knows where it is going in the future. While in the past the markets have bounced back, no one can know for sure. However, this does not mean you have to fear financially. The following are some great tips for having financial peace of mind during tough economic times.

Before we get to the specific tips, it is essential that you understand that if you want to not just survive uncertain economic times, but find peace during them, you have to get down to the basics financially.

  1. The first and most important thing you can do for yourself if you want to have financial peace of mind during a tough economic time is to pay off your debt as aggressively as you can. Debt is a burden that is costing you a lot, and that makes peace hard to find. So, eliminate it as quickly as possible. The following are some great ways to help you pay off your debts as quickly as possible:

  2. Helpful Resources:

    Controlling Your Finances
    This link offers tips from financial experts about achieving financial peace of mind and getting your finances under control based on what you make and when you make it, not the economy.

    10 Basic Financial Principles
    This is a great article about ten basic principles or ideas for achieving financial peace of mind during the tough economic times we sometimes face. It offers solutions for any income level.

    Financial Zen
    This is a great link for achieving financial zen, or in other words, how to get financial peace of mind. It offers tips that work anytime, no matter what the state of the economy is. It is a great resource.

    Financial Peace is in your Hands
    You have the power to achieve financial peace of mind no matter what the economy is like. This is a great article that shows you that your financial peace of mind is in your hands, not dependant on the economy.

    Frugal Living Tips
    This link takes you to a blog about financial peace of mind and how to achieve it through small day to day practices, such as saving for the hard times, or unexpected expenses. Great site for frugal living tips and coupons.

    Building Financial Peace
    This is a great site for learning the basics of how you can build financial peace of mind. It discusses the tips and tools for essential money matters, and has links to other money related topics.

    Peace During Hard Financial Times
    This is a site that offers tips for financial peace. It is not specifically for tough economic times, but many of the ideas discussed in this course can be applied to abundant or tough economic times.

    Achieving Financial Peace
    This is a great site for learning how to achieve financial peace in hard times. It offers advice for how you can afford hikes in gas prices, hikes in grocery bills, etc. by planning and paying down debt.

    8 Tips for Financial Peace of Mind for Students
    This site offers eights tips for financial peace of mind for students, but the ideas of not getting into debt, and living frugally can be applied to anyone and everyone. Great site for financial advice.

    Personal Financial Tips
    This is an internet blog that offers personal finance tips and financial peace of mind as your budget gets tighter, and your income lessens because of the tough economic times.

    • Avoid extravagant purchases until you are out of debt. With an economic decline it can be a depressing time, and many people try to ease their discomfort with material things, expensive vacations, lavish holiday celebrations etc. It is almost like they think if they ignore things, they will go away. However, the truth is, if you can cut out one vacation and use that money to pay down debt, the relief will be far more lasting than the 7 days you are on your vacation. So, put your big purchase plans on hold for a while, and instead work on paying off your debts.
    • Use debt pay down steps. One awesome way to aggressively pay off debts is to take your monthly payment amounts, and when a debt is paid off, apply the amount you were paying toward it each month to another debt. Soon, your debts will all be eliminated and you will have a nice chunk of money each month that is not already allocated toward something, that you can use to better secure your financial peace of mind.
    • Pay more than the minimums. When the economy starts to take a downturn, it can be hard to make ends meet. Many people are not sure how to afford the hike in gas prices or the hike in their groceries, but paying the minimum payment on debts is actually going to cost them more than they think. If you do not work on paying off extra, you end up spending far more in the long run. When you are barely making ends meet as it is, this does not make much sense. So, start by trying to double your minimum payment. It will be tight, and sometimes you won't be able to manage it, but eventually, you will be able to afford it, and then you can work on doubling it again.
    • Live more frugally so you do not incur more debt. As you aggressively pay off your existing debts it is time to put your credit cards in the freezer, and stop spending. You will never get out of debt if you keep getting into it as you pay off the debts you have. So, stop using credit, and get yourself out of debt before you pull your cards back out.
    • Build a savings. This goes along with the previously mentioned tip. If you want to get out of debt, you need to work on building some savings as you pay off your debt. This is going to be an emergency fund so that if your heater breaks in the middle of winter, or your car tires need replacing, you can pay for these things without getting into further debt.

  3. Now that you are working on paying off debt, let's look at some ways to get some extra money. During tough economic times most people already feel a strain on their finances, and are not sure how to make ends meet, but the fact is that pretty much any budget has room somewhere for cutting back or trimming the fat. The best way to do this is to start by looking at your monthly recurring expenses, decide which of those are needs, and which of those are wants, and what you can get rid of to free up some money for saving and for paying off additional debt. Here are some great tips:
    • Take a long hard look at your entertainment expenses. This is typically the first place people can cut back big on to save money. So, for example, start with your cable television package. Are you actually using the channels you have? Do you need them? Cutting back from a $90 a month package to a $75 a month package saves you $180 a year, that is like making an extra payment on a debt. Now examine other expenses, like movie rentals. You can often get free codes to rent movies from REDBOX for free, as long as you return them on time. You can get coupons for rent one get one free off the internet for almost any rental place. So, take a minute to look for these. Let's say you save one movie rental a week. At the average of $4 for a rental that is $208 a year. Again, that is an extra debt payment. What about your reading? Could you be using the library, or the internet for books, newspapers, magazine articles etc.? An average magazine subscription is $35 a year, so save that money and go online. If you were reading one book every two months, and visited the library instead of spending $20 on the book, that is a savings of $120 a year. Most people do not realize how a little trimming of the fat here and there can save significant amounts over the course of the year. If you were to cut back in each of the areas mentioned above, and then on your cell phone plan, home phone plan, and saw matinees instead of nighttime theater movies, you realistically could save $1000 a year without even realizing it.
    • Other areas where you can trim the fat are the convenience areas. If for example you were to brew your own coffee in the morning you could save $1000 a year. If you were to pack a lunch instead of buy one each day at work, same thing. What about those pricey vending machine snacks? When it comes to financial peace of mind during the tough economic times, it is the small cut backs that are going to make the biggest difference. If you got rid of television all together, you might save $90 a month, but how are you filling the time you were spending on tv? If you go out, etc. you might actually spend more. So, instead of trying to get rid of things all together, look for cheaper alternatives. For example, pack a lunch Monday through Thursday, and let Friday be the day you buy lunch at work. You do not have to deprive yourself completely, but live more frugally.
    • Last but not least, as you consciously make these small alterations, be sure to actually save that money, otherwise you might just start spending it elsewhere. For example, if you have been paying $90 a month for television service, and you get a less expensive package, that saves you $23 a month, then each month when you pay your cable bill, continue taking out that $23, but pay it to a savings account instead of the cable company.

  4. Pay bills on time is the next step to living a financially peaceful life during tough economic times. When you see your monthly basic living expenses start to rise, it can be tempting to put off paying down that credit card, or sending in that payment, because you start contemplating the what-ifs. However, financial peace of mind, no matter what the economic situation comes from having control over your finances. So, start today. When you go to the mailbox and find a bill, instead of putting off paying it, walk inside, and either get on your computer and pay the bill, or write out a check and stick it in the envelope and send it. This does two things: It ensures you never pay an expensive late fee on a bill, which saves you money, and it forces you to get a bit of a cushion in your bank account because you have to be able to pay the bills as they come in instead of waiting on your check to get there. It is a subconscious way of helping you live more frugally. People are more afraid of bouncing a check then they are of living in debt. So, by doing this you use the fear of not having funds to cover a payment stops you from incurring debts. It gets you into the mode of only buying things you already have the money for.
  5. Pay yourself. This has been addressed some already, but the best way to have financial peace during tough economic times is to have some cushion in your bank account. Most banks provide you with the ability to make automatic transfers or payments. Set this up so that you pay yourself a set amount each month into a savings account. Have it set up to come out the day your check is deposited so that you do not ever see the money. This will be your financial security net. If you have to use it, do so, but pay it back. Think of it as a loan, and make payments to it. If money is really tight, start with a small amount like $25 a paycheck, as your debts are eliminated, or if you get bonuses or work over time, or something, add to it.
  6. Lastly, for financial peace of mind during tough economic times you have to have a little money set aside for a rainy day. This is different than a savings account. You have seen banks fail, and while you should hope and pray it does not happen to you, it could. And while most people have their money in federally secured banks, it could take weeks, if not months to get your money, so have a cash emergency fund on hand so that you can still have utilities and feed your family if you lose your job, your bank goes under, etc.

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