May 03, 2024

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Coming to terms with poor financial health can be uncomfortable. But you are not alone. Many people don’t talk openly about their personal financial concerns, but that doesn’t mean they feel financially secure. It’s not uncommon to experience financial stress.

While it’s normal to want to ignore it, things don’t usually get better on their own. That's why it’s important to honestly assess your current money situation. Then you can decide on ways to take control of your future.

“Whatever mistakes or bad circumstances got you to this point are in the past, and the past does not define you. Anyone can turn their situation around, even if it seems impossible in the moment,” explained Thomas Maluck, an NFEC Certified Financial Education Instructor.

Whether you dream of buying your own home, traveling to exotic places, or ditching your day job, you can make small, realistic changes that may help you achieve big things in the future. Shifting how you spend, how you save, and how you handle debt might help you start to turn things around.

Ready for a brighter financial future? Check out the six tips below.

1. Take control of your finances

It’s natural to feel unsure about making financial decisions. And if you’re struggling with money, it may be tempting to throw up your hands. 

In fact, doing nothing often feels like the safest thing to do. But sitting back is usually not the best approach. Here are some actions that might help you get started.

Go back to the beginning

A first step toward improving your financial outlook is to understand how you got off track in the first place. Maybe it was a job loss, a major medical bill, or a life-changing event such as a divorce. 

Or maybe you got too busy and stopped paying attention to your finances. Just like small habits may be roadblocks to financial stability, there are also small positive things that might put you on a solid financial path.

Examine your full financial picture

Take an honest look at your current financial situation. What’s going well? Perhaps you got a new job recently, or a raise, or a better-than-expected bonus. What’s not going so well? Maybe your debt level has increased, or you were hit with an interest-rate hike.

When you have all the relevant facts, it’s easier to find the best action you might take to change course. That might mean directing part of that salary increase into a savings account. Or maybe it’s picking a new strategy for chipping away at that debt as aggressively as possible.

There is  usually something you can do now. And if you feel overwhelmed, that’s a sign that you might need to narrow your scope.

2. Learn from your mistakes

Many of us have made financial decisions that turned out to be costly mistakes. What’s important is to identify any missteps as soon as possible.

Avoid credit pitfalls

Unwise use of credit  can be a common money mistake. It may be relatively easy to open a credit card account, and even easier to rely on credit to live beyond one’s means, at least for a while.

Credit is an important financial tool. But it may become a trap if you carry revolving debt from month to month and don’t understand the annual percentage rate (APR).

Determine what is driving your spending

Emotional spending, like shopping when you are sad or bored, is another common financial misstep. Some people get in trouble because they lack a realistic budget or fail to consistently pay bills on time.

Examine how you view things

Running from poor financial decisions only hurts in the end. So why not adopt a growth mindset instead? With a growth mindset, you can acknowledge that you’re only human and that you can learn to improve your relationship with money.

This may help put you in a frame of mind to rethink the role of budgets and strategies when setting your financial goals. Then you may be able to forgive your past mistakes and improve your financial future.

“First and foremost, if you are feeling financial stress, be kind to yourself,” Maluck advised. “Your money does not determine your self-worth.”

And remember, mistakes might help you succeed if you are able to learn from them.

3. Commit to one positive financial habit

As you dig into the process of putting your financial life back on track, you might find yourself overwhelmed by the list of “musts.” Must save more. Must spend less. Must pay off debt.

Give your financial priorities the time they need

Financial anxiety may push you to shift from one priority to the next, before any one effort bears fruit.

Instead, allow yourself to pause and choose one small financial habit to change, one you know is within reach. It might be paying $20 more than your minimum credit card payment each month or getting rid of one streaming service.

Ride the momentum of success

One small success may lead to another, and every dollar saved will add up over time. Most important, you’ll gain confidence and develop positive financial habits for tackling even bigger goals.

4. Assess your debt situation

Struggling to find financial stability? Debt may be part of the problem. If so, it is important to have a clear plan about how to tackle it.

Distinguish good debt from bad

First, it’s helpful to understand exactly how much debt, including credit card balances, you have. Then assess what is good debt and bad debt for your individual situation. Generally speaking, good debt involves loans or credit tools that help you reach financial goals. Debt may be bad or damaging if it puts your financial health at risk.

Make debt reduction a primary goal

While it’s always important to build savings, making it a priority to pay down your most expensive or riskiest debt might make a significant difference to your finances. When you are out of debt, you may be able to ramp up your savings.

Look for ways to shrink interest payments

In addition, explore every option to reduce your interest payments. If you carry a balance across one or more higher-interest credit cards, you may be able to consolidate that debt with a personal loan and cut down the total amount of interest you pay.

5. Ask for help

Many people circle around our financial woes and try different tactics but never manage to make much progress. This might make the situation feel hopeless.

Work with a professional

“If there is anything you do not understand about your paycheck or your bills, it’s time to ask for help,” Maluck said. “You need to know how every dollar enters and exits your orbit.”

An experienced financial professional may help you set realistic, reachable goals for the short term. They may be able to help you with a debt-reduction strategy and to lay a solid foundation for future savings and investments.

Seek out a reputable organization

You might also contact a nonprofit credit counseling service to help you learn how to develop a workable budget. Or consider asking a trusted friend to be your accountability partner as you work on new financial habits.

6. Consider the benefits of a personal loan

When you’re trying to get back on track financially, it may make sense to consolidate debt with a personal loan. This is particularly true if you have several high-interest loans or credit card balances.

Add predictability to your monthly budget

A personal loan is an installment loan with a fixed rate and set repayment term. It may make budgeting easier and more predictable to have one set regular monthly payment.

Reduce your repayment time

Another benefit of a personal loan is that you may be able to shave years off your repayment time compared to the length of time it might take to pay off revolving credit when making minimum monthly payments.

Plan on a fixed interest rate

A personal loan to consolidate higher-interest debt might also help you save on interest. Because you lock in your interest rate for the term of the loan, a personal loan eliminates the risk of variable interest rates and rising payments tied to revolving loans. Even small interest-rate increases may cost you more money on variable-rate debt.

Choose a repayment plan that works for you

Flexibility is another benefit of a personal loan. You choose the repayment term that fits your financial situation, from 36 to 84 months. With Discover® Personal Loans, for example, if you get approved for a $15,000 loan at 13.99% APR for a term of 72 months, you’ll pay just $309 per month. 

If you want to get your financial life back on track, let Discover help you get started, with lending options tailored to your individual situation.

A personal loan may help you save money on interest while you pay down debt. To see your potential savings, try our debt consolidation calculator.

Calculate Your Debt Consolidation Savings

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