Nearly all Americans have experienced some financial challenges this year. People have lost their jobs, have had to cash out retirement and asset funds to put food on the table, or had to seek government assistance checks. To make matters worse, many more have simply had to rely on credit cards just to make ends meet. When planning your financial goals for 2021, follow these simple steps.
First, analyze your finances properly. Calculate a few important indicators, such as your disposable income and your debt-to-income ratio. How much do you have remaining after paying for essential expenses such as housing, utilities, food, clothing, medical care, and debt payments? If the answer is less than 20% of your total income; you should consult with a financial advisor. How much do you pay towards your debts each month compared to your overall income level? If the answer is more than 20%, you should consult with a Fort Worth bankruptcy lawyer about strategies to reduce the debt-to-income ratio.
Next, develop a budget. Pen to paper budgets should not be something your grandparents use; rather, it is an extremely useful tool when utilized consistently even in the year 2021. Your budget should consist of a few key components, starting with an emergency fund. In addition to your emergency fund, your plan should also focus on eliminating unnecessary expenses from your monthly spending budget. This will help lower your income-to-expense ratio. Finally, outline a strict plan for your debt payments. Paying only the minimum payment will never get you out of debt. Instead, look for ways to maximize your monthly payments by transferring the balance to a zero interest card or request a lower interest rate from your current company.
Finally, stick to your plan. It isn’t uncommon for people to at financial recovery because they do not stick to their plan. Like a New Year’s resolution for any goal; financial health should take the same priority and discipline as other areas of health in your life. Set both small and long term financial goals. Don’t forget to build in rewards for yourself and your efforts along the way. These small rewards will keep you motivated to stick to your plan.
If you are experiencing financial hardship or concerned about your debts, contact our Fort Worth bankruptcy lawyers today to discuss ways to start 2021 on the right financial path.