Financial stability seems like a luxury during tough economic times, but it is not out of reach. One study found that parents between ages 19 and 34 had the highest debt-to-income ratio, but watchful budgeting and a long-term financial strategy can help them stay afloat.
Create a Financial Plan
The first step to regaining your financial stability is writing down all goals and ideas. A solid financial plan should include the following:
- Short-, long-term, and monthly goals
- Details and documentation
A financial plan is particularly important if you struggle with overwhelming debt. List all of your credit card debt, beginning with the card that has the highest interest rate. To regain financial solvency, address the most pressing debts first.
Financial planning also includes specific goals, such as buying a new car or house. A financial plan is not an ironclad document. It can be adjusted accordingly.
Financial planning is a blueprint for success, but the end goal should be fixing your debt-to-income ratio to undo the squeeze on your family’s finances. You can calculate your debt-to-income ratio by dividing recurring monthly debts by your gross monthly income. Maintaining a solid debt-to-income ratio is imperative because it is a prime factor that underwriters look at during the mortgage process.
Debt reduction techniques include:
- Reducing credit card debt
- Paying other bills, such as utilities, on time
- Addressing long-term debts such as student loans
Heavy debts, such as student loans, must be worked out with lenders, but there are a variety of programs and consolidation measures that can help you obtain a lower monthly payment.
Increase Your Credit Score
Increasing your credit score is a great way to reduce the financial burden on your life. You can improve your score in a short amount of time by paying down debts while paying current bills on time. A good credit score is part of financial stability because it means your debt burden is low. Your score can help you qualify for a mortgage with an affordable interest rate.
Learn How Much You Can Save with Squeeze
The key to remaining financially stable is finding places to save. For example, you can cut the cord on cable or switch to a better mobile plan. To learn more, check out Squeeze.