Many people find it enormously difficult to manage their money, the average American carries $90,460.00 in debt according to Experian’s 2019 consumer debt study.
There are so many families out there struggling each month trying to figure out how in the world they will ever pay their mortgages, monthly credit card payments, car loans, utilities, etc. Do not feel ashamed if this rings a bell with you because you are most definitely not alone in this, OK…I, for example, am one of those people. I carry more credit card debt than I would like to admit, I can pay my bills but I have nothing left over for me, leaving me feeling like I am just treading water, along with defeated, ashamed and any other term you could insert here.
More often than not, people have an extremely hard time learning how to manage their money.
Continue reading to learn hacks about how you can get rid of your debt.
Paying off your debt and saving some dollars it is easy to do, but you need to develop some new habits. To do this, however, takes some conscious effort, as it is easy to get into the habit of living beyond your means. Learning how to effectively manage your finances is something difficult at first. After repeating some of the techniques you learn, within a matter of time, you will certainly be seeing somewhat of a difference.
Budgeting is the Entrance to Peace of Mind and Financial Wellness
Your debt problems may cause your health problems, or it may cause your relationship problems too. Debt can bring you down to a place so low, you never thought it to be possible, before now.
Take back your control and totally change your way of thinking and spending, whenever it comes to your money. How you manage your money can completely turn your life around and send you into a great big pile of financial freedom.
So many of us only dream about in our entire lives and normally never get to experience.
Manage Your Money
To begin with, you need to figure out how you are spending your money and on what. No surprise here, most people have no idea what the answer is to this question. If this describes you, then you need to begin with tracking all your expenses for a month. It is important not to guess. Budgeting is a critical part of being able to pay off your debt. A budget will make you review your finances, the ways you are spending money, it will make you examine your priorities and re-align them with your values. Forcing you to look hard at your debt, and in the process, you may just learn a little bit about yourself.
Cut Your Spending & Learn to Budget
Once you have completed tracking your expenses, it is time to really dissect your list and look for ways to start cutting costs and saving money. We will start by looking at the big ones, like your home, vehicles, insurance, and health care.
If your house payment (rent or mortgage) is to expensive…move! Why be a slave to a mortgage? If moving is not an option, consider your financing options. Can you re-finance at a lower interest rate? Re-financing can save you several hundred dollars a month. Start by negotiating with your current lender, who will be eager to listen if you have been paying in a timely manner. Do not go in blind, research and be prepared. Go online, look up the best interest rates possible for your size mortgage. As you renegotiate your mortgage, make sure you do it with no points and no closing costs, if the cost to re-finance is more upfront, it may not be worth it in the long run.
What about your homeowner’s insurance? Consider raising your deductible. Shop around! Insurance companies are competitive, and some may have better pricing than others!
Insurance
How about the car you drive? Is it financed with a huge monthly payment or does it have lousy gas mileage? Consider selling it and buying a more affordable vehicle. If you can pay for a car outright do that and be free of a payment. If financing is your only option, shop the loan, and buy a cheap vehicle with a low payment. Another option is refinancing your current loan. In some cases, your bank will be open to the idea. Don’t let a car stand between you, your family and financial freedom.
Your car insurance is a costly bill each month. Consider raising your deductibles, you don’t have to raise them a ton, research how much it would be to reduce your rate. Also, go over your policy, what are you paying for? In some cases, items are mysteriously added to your policy that you do not need. Ask for a multiple car or good driver discount. More discounts may be available to you if you use the same insurance company for both your homeowners and your car insurance. If you are no longer working, chances are you are driving less. Most insurance companies will reward you with a discount, but if they do not know about it, chances are, it is not going to happen. For vehicles seven years or older, consider carrying liability and uninsured motorist insurance only.
#1 Reason People File Bankruptcy? Medical Bills
Knowing that means you must have health insurance, but maybe you do not have to pay as much as you’re paying. If you have an individual policy, shop it. Remember, these companies are competitors. If you have a spouse whose company offers it, you should really evaluate the policy and know what you are paying for. Some employers offer their employees different coverage options. You should know what they are, and if it is to your advantage for you to switch to a different option, do it.
Another big expense you don’t think about is your phone bill. Many of us nowadays don’t have just one phone but up to three or more depending on how big your family is. Look at your plan, are you paying over any limits? Contact your cell phone company and see if there is a better plan to suit your family. Or perhaps a pay as you go cell phone is the most cost-effective option you should make.
If you pay for cable TV think about canceling it and finding other forms of entertainment. Many people pay upwards of hundreds of dollars for cable channels that they do not use. If you like to watch movies there are lots of cheaper ways to do so like Netflix, Hulu or Amazon Prime shows. The internet can be a great place to watch videos online for free too. Cutting out cable is a simple way to save hundreds of dollars each year.
Studying Your Monthly Expenses Can be an Eye-Opening Experience
Sort out those hefty APR cards. If you’re sitting on a large credit card balance, it’s time you switched to a 0% interest card for a fixed period. Many cards will give an interest-free period, shop around to confirm the 0% interest. Some cards also have bigger transfer fees be diligent and do your homework.
Save 10%, or even 5%, of your income into a separate account before you even see it, you will stop thinking of that as money you have available to spend. After just a couple of weeks or months, you will discover that you do not even miss this money because you will simply adjust to not having it. This will help to cut back on your spending and save you money.
Live Frugal
Living frugally does not mean that you deprive yourself of the finer things in life. Depriving yourself of anything and everything is not what the frugal living lifestyle is all about. In fact it is just the opposite because when you are frugal, you are able to keep expenses low, pay off debts faster, save and potentially invest money.
Be frugal with your food.
One way to manage your money is to start with the way you eat. Endure the pain and fix meals at home. You and I both know this is way more cost-effective than going out to eat all the time. That does not mean depriving yourself of going out to eat. It simply means to limit yourself to maybe one meal out a week of your choice. Make it simple.
Save on Your Weekly Shopping
Try looking for the special offers on the items you need, 2 for 1 or buy one get one free, if you buy only for the special pricing, you can end up spending more money than you intended. You could also try a store brand rather than the name brands, sometimes as much as 50% can be saved off one item.
Save with coupons
Learn to plan all your shopping and do not go on a whim and not just for groceries. For example, the worst time to buy holiday presents is right before the holidays. The perfect time to purchase is right after the holidays. This is when all the items you want go on sale.
For the most part people buy things without stopping to think if they need them or not. The more mindful you can be about what you buy and how much you spend, you will have an easier time getting your spending under control.
Save with Free Entertainment
Many people will also spend a lot of money during their free time simply because they are too lazy to look into all of the free or cheap things to do in their local area. If the weather is nice, go for a nature walk or easy hike. Most places will have a few different free things that will be listed in the newspapers and in free weekly publications. Once we are out of the pandemic, local concerts and art exhibits are sometimes free. Next time you are free, do some research on what activities you can do that cost little to no money. If you make the time to look for it, you will find plenty of entertainment that is affordable or free of cost.
Traveling is fun and so are vacations but taking a staycation is a great way to save money during your vacation time. This does not have to be a sacrifice, no matter where you live there are plenty of enjoyable activities that you don’t usually have time for. If you have kids, play tourist and take in the major sights of your city, find theme parks or other attractions. You can do this even if you don’t have kids! You will gain a better appreciation for your home town and you won’t have to deal with all the crazy stressors of traveling. When you are trying to save money you can have a great time at a fraction of the cost by staying close to home.
Get Creative About the Way You Save Money and the Savings Can Really Add Up
Get creative about the way you save money and the savings can really add up. You will spend more than you have on food, entertainment, and shopping simply because you don’t research any alternatives. Or if you are like me, you are lazy on the occasion. Reducing your expenses and learning to live by a budget could be the key to becoming debt-free. Successful budgets that work for people, work best when the person is honest and disciplined. Do not set yourself up for failure by neglecting to add expenses. It will just cause you more stress and problems later on.
Having a good handle on these essentials steps will help you when creating your budget. Do not be shy, get aggressive with your budget and what you can save will shock you.
Remember, if you want it bad enough, it will happen! Comment below and tell me what is the first step you are going to take to manage your money?
