If you are like most of us, you just let your finances evolve over time. You may have some money earmarked for savings every month, but like most of us, some emergency pops up, and you never save as much as you plan to save. Or you may have gotten that one credit card, just for emergencies, and then used it to pay an insurance deductible or medical bill, and then you just never quite got it paid off. These things are natural, and they almost seem to happen because our system sets us up so these things happen. However you can take a few simple steps to curb your monthly spending, and then try to use this money to improve your whole financial outlook.
First, what are your goals? Do you just want to climb out of debt, or are you saving for the retirement that you dream about? Maybe you would like to help your kids continue their education so they can realize a dream or two. If all of these financial goals, and more, look familiar to you, then take some comfort in the fact that you are hardly alone! Most of us are juggling multiple future plans for our money while still struggling to keep bills paid today.
However before you get too frustrated, take a moment to look at the assets you have now. You probably have more things accumulated than you even realize. Maybe you have more things than you even need, and servicing them is becoming a burden all by itself. If you haven't towed that boat to the lake in several months, maybe it is time to find a buyer. Not only can you get some cash to put towards other things, you can skip the storage and insurance bill. If you really get the urge to go sailing or fishing, you can probably rent a boat a few week-ends a month and find that is is much more convenient and cheaper for you than actually owning your own boat.
Is great-grandma's engagement ring still stashed in a safety deposit box? What if you could find a jewelry dealer who would give you enough money to pay off your credit card debt? And even if you don't have antique, precious jewels laying around, you probably have some unused electronics or clothing that would provide inventory for a large garage sale. I have neighbors who have pocketed $1,000 in one week-end, and also had the satisfaction of cleaning out their garages. They never missed the things they sold, and they felt better about having a bill paid off or some money in the emergency bill account.
Even if you do not have much to sell, you can still trim your bills. Gather your insurance and utility bills, and then start scoping out the competition. I, myself, shaved $50 a month off of my car insurance premium by comparing rates, and the whole process took me less than 5 minutes for initial quotes, and then 10 minutes for a phone application! That $50 a month adds up to $600 a year, and I forced myself to apply that money towards a credit card bill I had generated with an unplanned travel expense. I also found an electricity company that had economical rates, and also gave out frequent flyer miles every time my bill was paid. I saved some money on utilities, and am also working towards earning the points to get my next airplane ticket through a my points!
Of course, I also saved a lot of money by planning my grocery trips better. I am the most guilty one when it comes to stopping off at the supermarket for one little thing, and then returning home with bags of things I bought on impulse. It is certainly not my nature, but I am beginning to take a list to the store and only straying from it if I find an anticipated bargain on something I know I will use. I forced myself to sort out my pantry and realized that I had already purchased duplicate items that needed to be used before they were replaced. It might be fine to stock up on a few cans of soup or tuna. Those items can be healthy and economical snacks or light meals! But I also had three boxes of croutons and many duplicate herb containers. These were hardly stables that would starve my family if we ran out, and so I had to force myself to stay away from these aisles in the grocery store for a few weeks.
I also wasted a lot of money on produce that got spoiled before we ate it, so I am turning my weekly shopping trip into a couple of smaller trips. I buy one head of lettuce and one bunch of bananas, and then I just assume I will return in the middle of the week to replenish staples. Since produce is so expensive, but not something I want my family to do without, wasting it is almost like burning money in the fireplace. I also tend to buy more bags of frozen or canned vegetables, simply because it will not spoil so quickly. I love fresh vegetables, but I just buy a little for a treat that can be replenished when it is gone, instead of trying to buy enough for every meal I could think of planning.
I am sure that better planning at the grocery store saves me, at least $50 a week, if not more. I also tried to limit those trips out for fast food too. I can remember when I could take everybody to their favorite hamburger place for $10. If that were still true, it might almost be a reasonable thing to do whenever we feel like it. However, those bills were edging closer to $30. I could make the same burgers and fries at home, and probably in a healthier way, for the same $10 it used to cost. So now, if we feel the urge to get a burger, we try to eat at home first and then maybe just go out for some ice cream later.
I have outlined some ways that my own family tripped a couple hundred dollars from our monthly budget without really giving anything up. Furthermore, I am using the savings to pay off credit card debt, which will save us more money in the long run. I have earned a good credit score for paying bills promptly and do not have to service high interest. Can you look around your own life and find some ways to save money? If you are like most of us, you really can!
Think Before you Apply for a Credit Card
If you check your mail, one item that most people are sure to see several times per month is an invitation to apply for a credit card. These offers have inundated us, whether you are a college student, a homemaker, or even a senior citizen. It seems that almost every bank and card company are in stiff competition to see who can offer their services to the most people as possible. However, before you apply for your next credit card it is important to take several things into consideration.
How Many Credit Cards are Enough?
People love to collect items that are associated with wealth and exclusivity; however one item that you shouldn't collect is a credit card. Having more than two or three can exacerbate finance issues usually due to the ease in which a person can borrow beyond their means. For instance, if a person has only two cards each with a limit of $3,000 each, the individual will most likely be able to climb out of a debt hole if both limits are maxed out. However, if you have five, six or more cards with a total limit in the tens of thousands of dollars, it is no longer easy for a person to climb out of this kind of debt hole; in fact it can usually take 5 to 10 years for a person to pay off their debts in many of these cases. And in some cases the only resolution is bankruptcy.
Having Several Credit Cards Can Have a Negative Effect on Your Credit Rating
Some financial experts suggest that having more than three credit cards may be a red flag to many creditors and thus negatively effect your rating. Lenders prefer customers with manageable debt, the more credit cards you have, the more debt you can rack up. Even if you don't use many of them, there is still a possibility that you can always start maxing them out and find yourself in debt.
Use Bank Debit Cards Instead of Credit Cards
There are much more advantageous financial tools available besides credit cards that are just as convenient. Debit cards are very similar to credit cards in that they do not require you to carry large amounts of cash around with you at all times, however they are tied directly to your bank account, which means besides a small yearly or monthly fee, there are no interest payments since you are purchasing items with your own money. Credit cards on the other hand are considered unsecured loans and each purchase you make also requires you to pay interest. This means that a purchase of $20 for a DVD, can end up costing you 50% or even 100% more in the long run after interest charges are added. It is definitely something to think about the next time you would like to purchase an impulse item.
How Many Credit Cards are Enough?
People love to collect items that are associated with wealth and exclusivity; however one item that you shouldn't collect is a credit card. Having more than two or three can exacerbate finance issues usually due to the ease in which a person can borrow beyond their means. For instance, if a person has only two cards each with a limit of $3,000 each, the individual will most likely be able to climb out of a debt hole if both limits are maxed out. However, if you have five, six or more cards with a total limit in the tens of thousands of dollars, it is no longer easy for a person to climb out of this kind of debt hole; in fact it can usually take 5 to 10 years for a person to pay off their debts in many of these cases. And in some cases the only resolution is bankruptcy.
Having Several Credit Cards Can Have a Negative Effect on Your Credit Rating
Some financial experts suggest that having more than three credit cards may be a red flag to many creditors and thus negatively effect your rating. Lenders prefer customers with manageable debt, the more credit cards you have, the more debt you can rack up. Even if you don't use many of them, there is still a possibility that you can always start maxing them out and find yourself in debt.
Use Bank Debit Cards Instead of Credit Cards
There are much more advantageous financial tools available besides credit cards that are just as convenient. Debit cards are very similar to credit cards in that they do not require you to carry large amounts of cash around with you at all times, however they are tied directly to your bank account, which means besides a small yearly or monthly fee, there are no interest payments since you are purchasing items with your own money. Credit cards on the other hand are considered unsecured loans and each purchase you make also requires you to pay interest. This means that a purchase of $20 for a DVD, can end up costing you 50% or even 100% more in the long run after interest charges are added. It is definitely something to think about the next time you would like to purchase an impulse item.
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