Is it Easy to Improve Your Financial Situation?

improve your financial situation

If you're like any one of us out there, you're probably growing more and more reliant on credit cards, loans and other sorts of debt to make ends meet.

As the bills keep coming in and companies start to call your home, you start to wish you could do anything just to make this debt go away so that you can improve your financial situation and become entirely self–sufficient.

Thankfully, even in these dire financial circumstances, the most debt–plagued of us can still make it out from this unfortunate situation and gain the financial independence we need to give ourselves peace of mind.

Is it Easy to Improve Your Financial Situation?

In today’s post we'll be going over several things that you can do so that you are less reliant on borrowed money. You'll be able to size up exactly how much you owe, pay it off, and find ways to live without needing to accrue more debt. Wouldn’t that be a huge weight lifted off of your shoulders?

Organizing Your Finances

First on the list should be finding out what you're up against. This may be scary, but you need to do it.

Sit down and start writing down every financial fact about yourself, including annual income, tax deductions, any credit card and loan payments, insurance premiums, food, gas and grocery bills, even entertainment spending – anything that either makes you money or costs you money.

Be completely honest – every single penny that you spend should be factored into this list, so you can make an accurate appraisal of your spending habits and what your money goes to.

Once you have this list, add up the amount of money you make in a year, and also figure out the total expenses that you have on an annual basis.

How much of a disparity is there? Are your expenses higher than you income? By how much?

Are you using credit cards to pay your monthly bills?

How much of your money goes to things that you don't actually need?

If you're spending a lot more money than you're making, it's no wonder you're in debt.

Making More Money

Are you looking at your list that you've just created and wondering how you are going to pay for all this stuff when you don't have enough money?

You may even find that, no matter how much you cut down on your expenses, your current income isn't cutting it.

The only solution, therefore, is to make more money.

Obviously, the first step in this process is to either advance in the job you have now, get a pay raise, or look for another job that will pay you more money.

Try asking for a raise at your job, or look at positions within the company that are higher earning.

Update your resume and contact information, and secure references if you want to apply for another job.

In addition to that, you can do odd jobs for your neighbours or sell some of your belongings that you don't need to thrift shops or on eBay.

You could even hold your own garage sale if you want.

Do whatever you can to generate more income on a monthly basis so that you can pay for these expenses that you incur.

Skip that Daily Latte!

As you look over the list of your expenses, be sure to look at the things that qualify as necessities – rent, taxes, utilities, insurance, and the like.

Once you do that, look at how much more money you spend on stuff you don't need.

Of course, you need food and gas, but do you have to spend as much to get them?

Many people say that no one got rich by skipping their daily latte.

But when people are in a situation where every penny counts, the latte factor becomes very important.

Remember that the latte factor refers to so much more than just a fancy coffee.

It refers to any small expenditures that you make on a daily basis. It could be bottled water, candy, chewing gum, a bag of chips, magazines, pop, and so on. By the end of the month it all adds up. If you can find alternatives or quit buying those things all together, the money you were spending on those items could go towards paying off your debt or increasing your savings.

skip the daily latte

And what about those entertainment costs?

Try to cut down on entertainment first and foremost – if you're slowly sinking into credit card debt, you don't need to take a trip to the movies every week, or continually buy lunch at the local cafe, or head to the Pub for drinks and Nachos every night after work.

After that, look at how much gas you use. Is there any way that you can plan carpools or lessen the number of trips you make? Perhaps there's another gas station close to your area that typically provides a better price on fuel.

Also, if you can start planning your meals and rely more on leftovers, you can start cutting down the number of times you go out to restaurants, as well as minimizing the number of groceries that you buy that just end up getting thrown away.

Related: 30 Simple Ways to Save Money

And, most importantly, just get your coffee at home, instead of wasting your money on the overpriced, overly processed stuff you get at coffee shops – it's not helping your finances at all.

Each of these things might not add up to much on their own, but if you can successfully manage to cut down costs to what you absolutely need, you might find you have a lot more room to manoeuvre when dealing with your finances.

What's more, you could even locate room in your budget to squeeze in that latte every once in awhile as a treat – just try not to make it every day.

Financial Goals

One of the best things that you can do for yourself is to set financial goals. After all, it's all well and good to cut down on your expenses, but if you don't have a goal in mind, you won't be as inclined or motivated to follow through with your plans.

Start small when contemplating these goals – it can be something as simple as cutting your debt down to a certain percentage in a set period of time.

Once you find that you can accomplish that, you'll start to feel a lot better about your financial situation, and you can start to set your goals higher.

Soon, you can eliminate your debt entirely, and once you've finished with that, try to work on realistic financial goals to attain, such as beginning to invest in the stock market or buying a new house or a new car, or taking a vacation.

Try to set time limits and deadlines for these goals, so that you're more motivated to finish them quickly.

However, try not to do too much at once, because then you're just setting yourself up for failure, and you won't get anywhere fast.

Just take it one step at a time, and plan your larger goals in phases that you can easily meet, so you can feel the progress taking shape while allowing you to keep your momentum going.

Financial Freedom

By working on all of the above suggestions on a consistent basis you should be able to get the financial freedom that you deserve.

Initially you may feel like it isn’t easy to improve your financial situation. Please don’t be hard on yourself if you do not see instant results. Some people will be able to turn their financial situation around within 6 months or so, others may take 1 to 5 years.

financial freedom

Keep focusing on your goals and always maintain a positive attitude. It is so much easier to work on the things that challenge us when we look at things in a positive light and remember to smile.

Look at your complete financial situation; what you spend and what you make, and try to get it so you actually have money left over at the end of the year.

Once you do that, you can start to gradually work off your debt, and, before you know it, you won't owe anyone anything.

Just imagine it; no more paying interest, no more juggling of payments, no more frantically avoiding calls from collectors or your credit card companies – just simple, honest financial freedom that gives you the ability to live without any financial worries. It can be quite a satisfying feeling, and it's something that you can definitely experience given the right motivation and proper restraint. 


    • Laurie

      Laurie 02/01/2013 5:56 a.m. #

      Wise and valuable advice, Sicorra! Your line about taking it one step at a time is so important. And once you start taking those steps, it'll make the road to financial peace so much easier to walk, no matter how long it takes!

      • Sicorra

        Sicorra 02/03/2013 10 a.m. #

        As they always say, getting started is half the battle, right.

    • John S @ Frugal Rules

      John S @ Frugal Rules 02/01/2013 6:41 a.m. #

      Good post Sicorra! I think, generally, it can be fairly easy to improve your finances. I think a lot of times what can be missed is setting goals and having a plan to reach them. Another thing can be focusing on cutting expenses but not earning more income. Either will help, but the combination of the two is best.

      • Sicorra

        Sicorra 02/03/2013 10:03 a.m. #

        Yes, it can depend on your level of income to begin with. In so many cases people are making lots of money but because they have 6 cars in the driveway and the house is full of fancy stuff, they can still be in huge debt. In their case simply be eliminating that stuff and selling 5 of the their cars, they could be back on track.

    • Michelle

      Michelle 02/01/2013 7:38 a.m. #

      For us, we're working on paying down student loans and saving like crazy!

      • Sicorra

        Sicorra 02/03/2013 10:04 a.m. #

        Sounds like you guys have a great plan!

    • Money Beagle

      Money Beagle 02/01/2013 7:52 a.m. #

      The first thing that is key in situations like this is to get a handle on just knowing where you are spending money. The problem many people run into is that they don't really know this, so they try to capture this and make changes at the same time. Making changes right off the bat is actually premature because you could very well be concentrating on the wrong things, but you won't know that until you spend some time capturing your spending. Then it's the right time to sit down, analyze it, and come up with some changes. I think many people jump the gun. They have the right intentions but it's hard to execute properly without the proper sequencing.

      • Sicorra

        Sicorra 02/03/2013 10:06 a.m. #

        I can see that being very critical for families with a laundry list of expenses, such as child care, a number of vehicles, a TV in every room, multiple vacations, dining out frequently, and so on. They really do need to review it all, and it could take a while.

    • Pauline

      Pauline 02/01/2013 10:29 a.m. #

      Getting organized and reducing expenses is pretty easy, unless you live lean already. It all depends on you, whereas making extra money depends on other people paying you to do something, and can be more complicated, though not at all impossible.

      • Sicorra

        Sicorra 02/03/2013 10:09 a.m. #

        For some people earning additional money can be a struggle. Maybe they feel like they can't find the time, or they are already too tired from other things. I could see that happening where someone is already looking after a huge family, and has a day job, and just feels exhausted.

    • krantcents

      krantcents 02/01/2013 10:32 a.m. #

      Good points! I would think about setting priorities for that list as well. No one needs to do everything at once or there are somethings more important than others. I try to question everything I do to seel if it can change reduced or delayed.

      • Sicorra

        Sicorra 02/03/2013 10:11 a.m. #

        If a person is proactive then chances are good that they do not need to make a whole bunch of changes at once, but so many people wait until their finances become an emergency and the only way to pay their rent is by making drastic changes to their spending.

    • DC @  Young Adult Money

      DC @ Young Adult Money 02/01/2013 11:14 a.m. #

      I don't think it's easy to completely change your financial situation, but I think if you make a plan you can drastically change your situation over time. Let's face it: Making more means learning new skills and spending time on things that add value to someone somewhere. I have long-term goals that require short term commitments, and I hope to change my financial situation over tiem to the point where I "fully" own a home (no mortgage), have various cash flows from investments, and can do more of the things I love rather than be stressed out about money.

      • Sicorra

        Sicorra 02/03/2013 10:13 a.m. #

        That is a solid plan DC, and you are already on your way to accomplishing things such as building additional sources of income.

    • Shannon @ The Heavy Purse

      Shannon @ The Heavy Purse 02/01/2013 11:28 a.m. #

      I LOVE this post, Sicorra. Every point is spot-on. It is scary to figure out where you are, but an absolutely must. I also believe it's less scary than people think because now they can take steps to better their financial situation. I couldn't agree more that you need financial goals otherwise it's very hard to stay disciplined when you don't have something "worth" all your effort. Too many people skip this step and wonder why it's so hard to say "no". It's much easier to say "no" to a new pair of shoes when I'm saving for a trip with my girls who are beyond excited for the trip. There is no way I'd jeopardize their happiness for something I really don't need. Love, love this post. Great job!

      • Sicorra

        Sicorra 02/03/2013 10:17 a.m. #

        Thanks very much Shannon! I think the scary part when you add everything up is seeing just how out of control your finances have become. At that point a person can choose to ignore it all and wait until they go into foreclosure or are pushed into bankruptcy, or they can, as discussed, do something about it.

    • Debt Roundup

      Debt Roundup 02/01/2013 3:45 p.m. #

      I would say that it is not really easy, but then again, what is? It is rewarding to improve your situation and it can reward you for the rest of your life.

      • Sicorra

        Sicorra 02/03/2013 10:18 a.m. #

        That sense of accomplishment is always nice.

    • Catherine

      Catherine 02/01/2013 7:28 p.m. #

      If our finances start getting even a tiny bit out of control I become very uneasy. I need to know every little detail, thankfully my husband is an Excel God so helps me!

      • Sicorra

        Sicorra 02/03/2013 10:19 a.m. #

        It is so much better than just going along thinking everything will look after itself, isn't it?

    • femmefrugality

      femmefrugality 02/02/2013 8:12 p.m. #

      Such a great post! I'm with Debt Roundup. It's not easy. But totally achievable and worth it.

      • Sicorra

        Sicorra 02/03/2013 10:20 a.m. #

        It really depends on a person's situation. For some it could be quite easy, especially if they already live a pretty simple lifestyle.

    • Cassi

      Cassi 02/03/2013 8:51 a.m. #

      Nice article! This is currently affecting me, so it was nice to see everything written out. It eased my mind. Thanks!

      • Sicorra

        Sicorra 02/03/2013 10:21 a.m. #

        Good luck with whatever it is you are working on Cassi!

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