10 Steps to Financial Recovery

Getting control of your finances is within your reach Take these ten proactive steps to get yourself on the road to financial recovery.

1. Budget and save
Systematically add funds to a savings or emergency fund. Whether it's 10% each paycheck or $100 per month, automatically put a certain amount of money into a savings vehicle and forget you have it unless an emergency arises.

2. Cut spending
There are a multitude of ways you can cut back on expenses. It may require big cutbacks such as downsizing to a smaller and less expensive place to live or taking on a roommate, or less drastic costs such as buying ground beef instead of steak at the grocery store.

3. Track spending
Write down everything you spend money on. It's easy to see how much you're spending and where you're spending your money when it's all in writing. This is a quick and easy way to identify where you're overspending and cut back and cut out unnecessary spending.

4. Set goals
Set some short and long-term financial goals. Start with small goals you can accomplish such as paying off the $1,000 credit card balance you have. Work up into bigger financial goals such as having all of your credit card debt paid off in five years or less.

5. Earn more
There are plenty of ways you can earn some extra money. Take on a second part-time job, work from home freelance writing on the side or start a business selling your craft item. Use all of this extra cash to pay down and get rid of your outstanding debt such as credit cards. It's amazing how quickly this can help you gain control of your finances again.

6. Pay off bad and high interest debt first
Bad debt and high interest rates typically go hand-in-hand. Concentrate on paying off this debt first.

7. Check your credit score
Credit scores of 720 and higher typically bring borrowers lower interest rates and better terms on loans. Find out what your credit score is and if it's low, take some steps to improve it.

8. Dispute and correct credit errors
If there are items that are incorrect or do not belong to you, it may be bringing your credit score down. Work with the credit agencies to dispute any erroneous items and it can improve your score.

9. Use automatic payments
Pay your bills online or setup your bills for automatic payments. It ensures your bills are always paid on time, which reduces late fees and improves your credit score.

10. Do financial check-ups
Set a schedule once a quarter or a couple times a year where you check on your financial situation and make repairs and fixes where needed.