It is very hard to go through life without the ability to save money. Without that financial buffer, a trip to the doctor or to the auto garage is a financial emergency, one that causes a great deal of stress and uncertainty. Once it’s overcome and things calm down, you’re at the mercy of the next event. The good news is that you don’t have to live this way. Your financial situation won’t improve overnight, but by taking consistent steps and perhaps thinking a little differently about the money you have, you will see a difference. You will get to the point where you are saving money and are able to handle car repairs and anything else that happens just fine.
Pay Down Your Debt And Say Goodbye to It Forever.
You’ve no doubt heard it said before, but it’s worth repeating: pay down your debt. This is especially true for credit cards. The average American has around $6,200 in credit card debt. Think of what $6,200 could buy: a new car, a vacation, perhaps a semester of college. Remind yourself of this truth when you shop: there is no amount of money that is so small that it’s okay to use a credit card to pay for it.
If you have multiple credit cards or sources of debt, it can be very overwhelming to tackle them. To avoid feeling that way, you can pay down the smallest debt first, and when you do, celebrate! You have paid off a debt, and you deserve to be proud of yourself. Then move on to the next one and do the same. You’ll see over time that your ability to save money will improve because you will no longer be putting that money towards debt.
An Emergency Fund Will Help You A Lot.
Can you handle an emergency car repair? Are you able to pay for a sudden trip to the vet for your pets? Many Americans do not have the ability to cover unexpected expenses and so resort to using their credit cards to pay for them, creating more debt for themselves.
To break this cycle, you can pay off your credit cards and then build a $1,000 emergency fund. That money is why the next set of tires or a root canal won’t become a new debt – you’ll be able to draw upon the fund to cover the expense. Once you do, you then build the fund back up again.
As your finances improve and you’re able to save more money, experts recommend that you have a savings that will cover 3-6 months of your living expenses. That may take a while to establish, but you’ll enjoy the confidence that you have from knowing you can take care of yourself and avoid debt.
Forgo Those Automatic Subscriptions and Memberships
A lot of people are not aware of what they are spending. It’s very easy, for example, to set up a Netflix account and have monthly automatic payments on your credit card. Perhaps you have a gym membership and do the same. While it’s convenient to use automatic payments, after a while, it’s very easy to forget about them. This is especially important if you’re using a credit card to pay for them and are not paying those charges off each month. They can create debt as time goes by, so to avoid that, you can make the payments each month on your own or at least have them come out of your debit account.
Set Yourself Up to Save Money Automatically
When you get a paycheck, do you pay yourself first or give your money to other people? If it’s the latter, you may not have anything left for yourself after you finish paying rent, the electric bill, and other bills. To pay yourself first and ultimately create a savings account, consider what you make per hour. Some people choose to keep the first hour’s earnings each day for themselves, then use the remaining money to pay bills. They put their own money into an IRA or a retirement account. Doing this over time will mean that you’ll grow a significant savings that can help you do the things you want to do, like take a vacation or retire.
Put a Freeze on Your Spending
We all love to buy things, but do we really need them? To find out if you are purchasing unnecessary items, you can challenge yourself for two weeks to not buy anything beyond groceries, medicine, and gas. What will you not purchase during that time? A Starbucks drink? Fast food? Clothes that you didn’t really need? The money that you save may offer you clues to how you can continue to save money.
Refinance Your Mortgage
The twenty-year refinance rate has dropped again to 2.375%, and ten-year rates are at just 2.000%. What will you do with the money you’ll save? Put it towards your child’s college education? Pay off your mortgage even faster? Invest it? Do the math and see just how much money you’ll be able to keep by refinancing your mortgage, then decide how to use that money. Taking advantage of today’s excellent lending rates can be to your advantage.
Consolidate Your Debt
If you are struggling with paying off payday loans or unsecured personal loans, the reason may be because of the interest rates on payday loans, which can spiral out of control once a payment is missed – all the way up to 391% or even higher. If you have multiple debts, including payday loans, at high interest rates, you do have debt consolidation options. There are many reputable companies that will consolidate payday loans and other debts, so do some research and explore your options. You may be able to get one big loan at a better interest rate and use that to pay off all your other debts, ultimately saving money for yourself.
A Final Word on Saving Money
It is never easy to pay off debt and start saving money, but it is possible. It all starts with taking easy, consistent steps. Understand what your options are, and take a good look at where your money is going. Decide on the first step, keep at it until it becomes a habit, then start on the next step. With each one that you take, you walk away from debt forever and to an increased ability to save money.
Author Bio: Virendra Kalani is the founder and one of the principal attorneys of OVLG, where he provides debt solutions you can trust. Mr. Kalani is a certified tax attorney with over 42 years of experience in legal research and writing. He provides financial advice on tax, debt management, business law, and estate planning.