Avoid Money Problems with These Tips
Money problems are one of the leading causes of stress in the western world. For many of us, the term “paycheck to paycheck” has a very real meaning. There are even plenty of households which have come to rely on overdrafts or credit cards on a monthly basis. This is an extremely hard rut to get out of—and that’s exactly what it is. When one relies on an overdraft or credit card to cover monthly expenses, the next paycheck to come in ends up being cut short right off the bat. Whether it gets deposited into a negative-balance bank account or when the credit card bill comes in and a payment has to be made, one doesn’t get true use of the full paycheck. With a shortened paycheck, one usually ends up going back into overdraft once the bills have been paid and other necessities are taken care of. It’s a vicious cycle of getting in and getting out of debt that occurs on a regular basis, but there are ways to slowly get out of the “hole” and stay out.
Create a Budget
The first place to start when trying to avoid money problems is to create a budget. Even though most people believe they know exactly how much money they have coming in and going out, many people tend to forget about the little expenses that seem to crop up every month. Small expenses, such as movie rental accounts (Netflix, anyone?), weekly dine-out nights, and similar expenses are often recurring for most families yet aren’t accounted for when bill time comes around. Before racking up these extra expenditures, try mapping out a list of how much money comes in each week or month, as well as everything (necessary) that goes out. By necessary, I mean the things you really have to pay on every month, like rent/mortgage, utilities, cell phones, car payments, insurance, credit card or loan payments, etc. Subtract the “going out” total from the “coming in” total. With any luck, the balance should be in the positives and you can start considering the little “extras” you can afford and even think about starting a savings account.
If the balance is indeed in the negatives and you haven’t been adding in unnecessary items, then it’s time to start looking at where you’re going wrong. If your credit card payments are really killing you, ask yourself whether you still use the card. If you keep making payments on a card, yet you continue to use the card every month, then it will be a long time before your payments actually start to make an impact. The idea of making payments on credit items is to eventually pay them off—not to stay in a recurring cycle of debt. If your mortgage interest rate is causing you a lot of financial grief, try speaking to your lender to see if you qualify for a better deal. A lot of times people get into a mortgage with a higher interest rate due to a poor or under-developed credit history, but after a few years of making timely mortgage payments, you should be able to have your mortgage re-evaluated for a better deal.
Cut Back on Unnecessary Spending
Whether we admit it or not, we are all guilty of some unnecessary pleasure that we splurge on every time we get paid. Avoiding temptation is the key, here. Do you enjoy a frozen coffee from the corner shop every morning before work? Say you spend $2 on this coffee—at best. Multiply this charge by the number of days you go to work (let’s estimate the average of five work days) and you have $10 every week, or $40 every month, going towards a daily cup of coffee. There are plenty of other uses that money could be put towards such as gas, covering overdraft or interest fees, or even being put into a savings account. If clothes or electronic gadgets are your weakness, try avoiding these shops by taking a different route to work or make a conscious effort not to window-shop. Avoid online or catalogue splurges by making the task less convenient. Delete shopping bookmarks from your internet browser and unsubscribe from catalogues. Do whatever it takes to make sure that you aren’t giving in to these temptations on a regular basis and developing money problems because of them.
Develop Thrifty Shopping Habits
Instead of shopping at pricey name brand stores, try looking at discount stores that can offer the same types of items at discount prices. Revolving expenses, such as household items, can really add up, and shopping at discount stores—such as “dollar” stores—can save you a real bundle. You can also save loads by becoming a coupon clipper. Most Sunday newspapers are jam-packed with great coupons on stuff that many people already purchase. Why not save money where you can?