Have you ever wondered when was the right time to take action now and improve your financial condition? The answer is simple, the time is now. No matter what time it is when you are reading this, the time to take action now to improve your financial condition is now, right now.
The first step in improving your financial condition is to understand your current situation.
It is hard to improve a thing if you do not have a clear understanding of it. Many people know they should take action now to improve their financial condition, but they are at a loss as to how to do it. The first step is to find out your current financial condition. In order to do this, you need to start gathering information. Start with the following:
- bank statements
- credit card statements
- utility bills
- mortgage statements
- investment account reports
- tax returns for the past two years
- pay stubs
Once you have gathered all these items it is time to look at them and try to understand what everything means. Look at your bank statement. Most people only look at the ending balance on the bank statement. This number shows your bank balance on a particular date. However, your bank statement shows so much more! Your bank statement show so much more. Your bank statement gives a clear indication of your cash flow. Cash flow can be described as the money that goes in and out of a place like your bank account. Understanding your cash flow is an important part of improving your financial condition.
Credit Card Statements
Credit card statements show where you are spending money and financial obligations you have to others. When reviewing credit card statements, look at where you are spending money. Are the purchases you are making wise ones? Are you paying your credit cards off early so that you avoid interest charges? Do you have a plan to manage or eliminate your credit card debt? Taking control of your finances means planning to do just that.
It is important to pay attention to your utility bills. Compare your utility usage this year to last year. If there is a significant increase from one year to the next, look for a reason. One reason could be an increase in fees from the utility provider. If this is the reason for the decrease, there is nothing you can do about it. Large increases in utility service costs could be due to inefficient appliances, drafty windows, faulty connections or even pipes with slow leaks. After reviewing your utility bills, look at all these things. The money you save on utility bills can be used for more important or higher level financial matters.
For most people, a home mortgage is the largest and most significant financial obligations that occurs in a lifetime. Look at your mortgage statement to make sure your payments are being recorded and credited properly. Look at the interest rate you are paying. It may be time for you to refinance your mortgage obligation. However, before agreeing to a mortgage refinance, make sure any potential savings are not eaten away by upfront fees for title, escrows, appraisals, bank and broker fees.
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