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20 Tips to Keep Out of Financial RuinYour finances can make you or break you and, unfortunately, there are several variables that can cause you to become financially devastated. Following a few key guidelines, however, can keep you from financial ruin. Tip #1: Buy Life Insurance Life has many unexpected twists and turns. If you have a family to take care of, life insurance is particularly important for both you and your spouse. A death in the family, particularly of the breadwinner, is a leading cause of financial ruin to families. Dont let this happen to you. Tip #2: Buy Health Insurance Individuals lacking health insurance can be devastated when facing medical problems. The same is true for individuals with families. Protect yourself and your family by obtaining health insurance to cover you in case of medical problems and emergencies. Tip #3: Buy Homeowners Insurance Homeowners insurance protects you in two primary ways. First, if someone steals from you or vandalizes your property, you are protected. Second, if someone gets hurt on your property you do not have to worry about losing everything you have worked for by being sued. Tip #4: Buy Car Insurance Most states require minimum insurance to protect the other driver. If your car is still valuable, it is worthwhile to purchase more insurance to cover the value of your car should it be damaged or stolen. Tip #5: Purchase Gap Insurance If you still owe money on your car, consider purchasing gap insurance. Gap insurance will cover the entire amount you owe on the car. This is particularly helpful if you owe more money on the car than its assessed value. Tip #6: Dont Get Divorced Divorce is another leading cause of financial ruin for both men and women. Make sure you are truly ready for marriage before taking the plunge and if there are problems in the relationship, work to fix them before getting divorced. Tip #7: Dont Spend Above Your Means Many people get swept away by the ease of credit card use. Unfortunately, it is easy to get buried in debt that is impossible to get out of. Make sure to never spend more than you can truly afford. Tip #8: Dont Impulse Buy Debt is easily piled up when you impulse buy. Be sure to think out every purchase before making it and decide if it is truly necessary. Tip #9: Make Sound Investments Investments in stocks, mutual funds, and IRAs can help secure your financial future. Unless you have the money to spend, dont gamble too much on your investments. Be sure to always at least have a portion of your portfolio invested in safe investments. Tip #10: Plan for a Rainy Day You should always have money set aside in your savings account in case of emergency. Many professionals recommend having at least one months income saved. You never know when a rainy day may strike. Tip #11: Plan for Retirement Too many people fail to realize that it is best to start planning early for retirement. The earlier the better. Tip #12: Pay Bills on Time Not only does failure to pay bills on time hurt your credit score, it also costs more money. Late fees and penalty fees add up over time and are money just being thrown away. Tip #13: Consult a Financial Advisor Even if you think you know how to handle your finances, a financial advisor can most likely tell you how to do it better. Take advantage of their services. Tip #14: Get Help from a Credit Counselor If it looks like your finances are spiraling out of control and you cant stop it, enlist the expertise of a non-profit credit counselor to get you back on track. Tip #15: Keep Interest Rates Low When shopping for loans and credit cards, be sure to choose the ones with the lowest interest rates. The savings can be phenomenal. Tip #16: Pay Ahead Many companies, particularly insurance companies, allow you the convenience of making monthly payments. What you dont realize is that you are paying more for the year by spacing out the payments. Instead, make your payments for the year all at once and save yourself some money. Tip #17: Dont Carry a Credit Card Balance Not only are credit card balances assessed finance charges, the inability to pay your card off each month indicates you are spending above your means. Tip #18: Make Purchases with Cash Only If you have a difficult time resisting temptation to buy, leave your credit cards at home and only make purchases with cash on hand. Tip #19: Buy Used Its a fact new cars depreciate as soon as you drive them off the lot. Buy a used car with low mileage and save yourself thousands on the sticker price and on insurance. Tip #20: Keep Track of Expenses Keeping an expense diary is a great way to discover where your money is going. You may discover you are spending far too much at restaurants or other unnecessary items. Assess your spending habits honestly and change them accordingly.
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