100 Ways to Improve 1% – Part 2
This post will be another part of my series “100 Ways to Improve 1%”.
If you are on the FIRE journey, then chances are you have already modified the “big-ticket” items when it comes to your expenses, this is looking at exploring some more fine-tuning touches you can make to your everyday life.
This list has been derived from the people at ChooseFI
Below are the links to the other sections that are part of this series:
Part 1 – Exercise and Personal Growth
Part 2 – Debt
Part 3 – Emergency Fund Savings
Part 4 – Home Expenses
Part 5 – Transportation Expenses
Part 6 – Groceries and Dining Out
Part 7 – Shopping and Services
Part 8 – Internet, Phone and Entertainment
Part 9 – Travel and Sightseeing
Part 10 – Earning Extra Money
Part 11 – Investing and Retirement Planning
Part 12 – Job and Career
Part 2 – Debt
Debt is something that just about everyone who looks to build wealth will need to have at one point in their lives. We need to be able to control our debt, to use it to our advantage, not to let debt use us and control our lives.
8) Create Your Debt Snowball or Avalanche
If you are starting out with FIRE, then one of the first steps is to get your debt under control.
Snowball Method – pay off your debts from the smallest to the largest.
Avalanche Method – start with the highest interest rate and move down.
Either method is fine, pick whichever method you think will motivate yourself the most.
9) Improve Your Credit Score
This might be more relevant in the US, but it is still relevant to Australia. The last thing you want to have is bad credit on your record as it could seriously hamper you down the line.
The following are ways you can help to improve your credit score:
- Lower your credit card limit
- Limit how many applications you make for credit
- Pay your rent/mortgage on time
- Pay your utility bills on time
- Pay your credit card on time each month (either in full or more than the minimum)
Once you can do the above, just let time do it’s thing and you will be well on your way to improving your credit score.
10) Refinance Your Loans
If you can, you may want to look at refinancing any loans you have. There seems to always be lower interest rates out there and you will need to be proactive and seek them out to take full advantage. Make sure you take into account any closing and ongoing costs with the new loan, just to make sure you are achieving a financial advantage.
11) Stop Using Credit Cards
One of the best ways to avoid consumer debt taking over your life, is to never incur any in the first place. If you stop using credit cards it can be a sure-fire way to stop any debt coming your way.
This might not for everyone, if you are controlled and can use your credit card and pay off any balance before incurring any interest, then, if it suits you, continue to use your credit card.
12) Negotiate Payment Plans
If you are struggling to pay down your current debt, then you may be able to negotiate favourable payment plans which can help you pay down your debt at lower interest rates, without the worry of debt collectors coming to knock on your door.
13) Sell Items You Do Not Need
Not only will this help de-clutter your life, and give you more space to live in. If you use the proceeds from your sales to pay down your debt, then the financial gain will be magnified due to reducing interest payments in the long run.