It’s easy to find yourself living beyond your means. All you need is a credit card, a personal loan, or overdraft protection.
Little by little, you’re in over your head.
Would you like to learn how to manage and save your money… and stop living on credit?
Before you hammer out that budget yet again, here are three tips that’ll help you stick to your plan and curb overspending.
Tip Number 1: Get Financially Organized
Answer these questions:
How much is your take-home pay each month—not every other week—but each month?
How much is auto-deducted from your bank account monthly? When?
When are your periodic payments, like insurance, due?
How much money do you owe?
If you’ve culled through your stash of pay stubs, credit card bills and financial statements and are hard-pressed to provide answers, you need to get organized.
Use an Excel spreadsheet or, better yet, a budgeting app like Mint on your phone to track your financial information in one convenient place.
A good start is to find out what you owe.
Tip Number 2: Be an Informed Consumer
You should also know how much you’re paying for credit. What’s the interest rate on your card?
Is it 15 percent? 22 percent? Consider this:
If you borrow, say $1,000 at 15 percent and make the minimum payment, you’ll repay $1,576.75.
Think that’s bad? Bump that rate up to 22 percent and you’ll repay $2,234.15. That’s living beyond your means.
What can you do? Try negotiating with your credit card company.
Request a lower rate. Or find a better card.
Tip Number 3: Pay in Cash
Finally, remove the credit card from your wallet. Divvy up your discretionary money into envelopes according to your budget.
Once the cash is gone, stop spending. Can’t afford something? Wait until you save the cash. You’ll find yourself spending less.
In case of emergency, use savings. No emergency savings? Use your credit card, then pay it off before the statement date. If that’s not feasible, they pay it off as soon as possible.
At the same time that you’re paying off your purchase, set up an auto-deduction for savings.
Aim for at least $500 in savings for future emergencies. Save a little each week until you’re there.
Follow these three tips and you’ll find it much easier to stick to your budget and avoid living beyond your means.
Get Financial Help
It may be that despite your best efforts to stay within your means, you are already overextended and have too many bills. If that’s your situation, you may need professional help.
The Licensed Insolvency Trustees at Adamson & Associates can help you eliminate your debt. Call now for your free, no-obligation consultation.
There are options available to help you get back on track.
For more information, call Adamson & Associates at 519.310.JOHN (5646).