Financial Fitness

Today's cost of living is ridiculous! It's time to examine your financial fitness

The fact that gasoline prices are through the roof, food is fast becoming a luxury item and electricity costs have us wondering how we'll manage this winter is not exactly a newsflash. We're all aware that the cost of living is eating into our savings potential and that maintaining our current lifestyle is becoming a challenge worthy of a magician's skills.

It's enough to send you looking for that bag of cookies and just forget the whole thing. However, now's the time to sit down and take a hard look at where your finances stand. Here's how to make a quick assessment of your financial reality.

Just about everyone uses at least one credit card. Do you make only the minimum payment each month? If you're charging more than you're paying, this is a clear signal to rein in those purchases. Go through your last year's credit card statements and make a pencil mark next to those purchases you didn't need to make. Add it up. This amount can be shocking. Resolve to purchase only necessities with your credit card. Pay cash for unnecessary purchases. Start paying that card down, as much as you can manage each month. Your cost of living is not going to go down. Credit card interest accumulates at an alarming rate.

What's your credit card balance? The average American's credit card debt is a whopping $7,000. If you make the minimum payment, of, say, $250, without incurring any new debt, it will take more than fifteen years to pay it off! With the current cost of living, many people find it difficult to make the minimum payment and still meet all of their other obligations. What can you do? You need to get creative.

If your credit score is above 600, try to negotiate a better rate, or look at consolidating your debt. Seek the advice of a non-profit credit counseling service.

If your credit score is below 600, you won't have as many options, although credit counseling services are still valuable. Consider more mundane solutions, such as holding a yard sale. You didn't get into debt without accumulating a lot of household goods. One woman I spoke with began holding a yard sale every 3 months, selling clothes, old bikes and gadgets which she hadn't used in years. She's been doing this for years now and has never walked away with less than $500 per yard sale. Sell on eBay. Got a second car you don't need? Sell it. Put all of your proceeds towards your debt.

If you empty your pockets of change every night and stash it, it adds up. Throw soda can return money in the basket. At the end of the month, put it all towards debt. At worst, it will fill up your gas tank.

Using these strategies can get you back on track. While the cost of living goes up, your debt can still go down.

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