Prevent Your Own Fiscal Cliff in 2013

Posted on February 12 2013

It is inevitable. 2013 is going to be more expensive than 2012. The new Payroll Tax Cut means there will be 2% less in everyone’s paychecks, plus the costs of goods and services is usually always on the rise. How will you cope? Here are our top tips to avoid your own fiscal cliff.

Save for Emergencies

If you are living paycheck to paycheck without setting money aside for savings, you need to seriously consider changing that habit. It may be hard, but if you aren’t prepared for emergency bills or expenses, you will end up worse off. Start saving some money from each paycheck and place it in a savings account. In the event of an emergency, you will be glad that you did.

Create a Budget

Many people aren’t using budgets to plan their spending for the year. If you want to be successful financially, you need to know how and where you are spending your money. Create a plan, stick to it and monitor it. Using a budget makes managing your finances clear and easy and holds you more accountable to how you are spending your money.

Pay off Debt

If you don’t have a plan for paying off your debt, you need to put one together. Start by tackling the debt with the highest interest rates. If you only have no interest debt, don’t take that as a free pass. Eventually you will have to pay interest on those loans, and it is better to pay them before the interest kicks in.

Think before You Sign

If someone asks you to co-sign on a loan or lease, think before you sign. Is this person going to be able to make their payments or is there a possibility the responsibility could get dumped onto you? Can you handle paying someone else’s loan payments if necessary? Be sure to take these thoughts into consideration before you sign on the dotted line.

Cash > Cards
Before you head to the grocery store or the mall to do some shopping, be sure that you know how much you can afford to spend on your trip. Instead of bringing your credit cards with you, only take out as much cash as you have allowed yourself to spend. This will help you stick to your budget and avoid increasing your credit card payment.

Follow these tips to avoid falling over your own fiscal cliff. If you aren’t sure where to start or feel overwhelmed, Family Life Credit Services is offering a new service where you will work with a credit counselor to learn good habits and implement them into your daily life. Interested in learning more? Check out our Financial Coaching services.

Photo Courtesy of meddygarnet/Flickr