If you want to pay off your credit card, these tips can help. Credit: Colourbox
Feeling trapped by increasing debt or living paycheck to paycheck with no money left over to save can be incredibly overwhelming. If you have no idea how to start changing your current financial situation, self-made millionaire and "Financial Happine$$" author, Mike Finley's advice can help.
What is the first thing people who feel overwhelmed by their current financial situation should do?
Get educated. Education will reduce a lot of your fears. It starts to put us down a path where we feel in control of the situation. I have a list of books on my website written by people who will give you all the options and then you can find the most efficient one to use that's going to serve your needs.
For people with a lot of debt, how can they figure out what to prioritize and pay off first?
Financially, the smartest approach is to make a list of your debts and start tackling the loan with the highest interest rate. When you pay off that one, tackle the debt with the next highest interest rate. This method is called "debt avalanche," but there's also another method people find effective. The second method is to make a list of your debts and pay off the smallest debt first. Then tackle the next smallest. This will give you a feeling of accomplishment. Seeing results of a debt disappearing is a great motivator.
What are people in their 20s and 30s overspending on the most?
Being overly materialistic is an easy way to stay broke your entire life. Reducing the amount of materialism in your life will automatically reduce how you spend your money. It's a big step. You have to self-reflect on what you're doing and the world around you and reduce your self image being connected to so much stuff. Once you do that, it opens up a lot more money for your to pay off debts or invest in the future and really takes you closer to financial freedom.
People are commonly told that 50 percent of their paycheck should go to bills, 20 percent should be for savings and 20 percent should be fun money. Does that equation change for people with a lot of debt?
Yes, it does. If you're in debt, take the 20 percent you would put in your savings and put it toward your debt.
What's an easy way for people to track their spending without it feeling like a chore that ultimately doesn't end up getting done?
I'm a big advocate of tracking your spending. You have no idea where you are until you identify where you're at and identify where your money is going. The key is to find a system that is simple and sustainable. On my website, I have spreadsheets and directions how to keep it simple.