It happens quickly; you buy a home, a car, and owe thousands of dollars to credit cards. Before you know it, every cent you bring in is going right back out the door. Debt is something that creeps up on you and reveals itself later when you suddenly realize you’re cash poor. Thankfully, with a few lifestyle changes, you can reduce the debt and return to a comfortable life.
Create a Household Budget
The only way to find out what you owe is to create a household budget. Make a list of all your bills, the monthly and those that come due once or twice each year. Then factor in your living expenses and deduct both from your net income. If you discover what you pay out exceeds what you bring in, you need to either reduce your expenses or increase your earnings.
Free Up Money
In most cases, everyone can reduce their expenses by cutting back. For example, if your cable bill is a few hundred each month, contact the company to remove premium channels. If you have leftover minutes on your cell service, switch to a lower plan. Bundling services with the same company, as you can do with various insurances, can help reduce the bill. If you have added on streaming services such as Hulu and Netflix, cancel the services. These few adjustments will free up money that you can use to pay off debt quickly.
If you have large amounts of debt from multiple sources, consolidating it may prove beneficial. Companies like Old Dominion Associates offer consolidation loans with interest rates lower than most credit cards. You’ll reduce the amount you need to pay monthly and with only one bill with reduced interest, you’ll be able to pay the debt off faster.
Living Within Your Means
Many people fall into hard financial times because of poor spending habits. They see something they want and buy it, giving no thought to repayment. Eventually, credit cards become maxed out, and they apply for another card and continue their reckless behavior. It’s a simple concept; if you can’t buy something with cash, you can’t afford it. There are a few exceptions like a home or an auto. In the future, adopt the policy of living within your means. If there’s something you really want, save for it.
Learn to Save Money
People who are successful with finances don’t spend every penny they bring in. They take a portion of each paycheck and put it into a savings account. This money is there to ensure that if something unexpected comes their way, they have money in reserve. Regardless of your current financial status, you need to open a savings account. Start with small deposits and increase the amount when you get a raise or pay off debt.
Adopting a Frugal Lifestyle
The word frugal often gets a bad rep. People misinterpret it to mean doing without, compromising their way of living. This is not true. In fact, adopting a frugal lifestyle enhances your quality of life. You spend less on things you need and have more money to do the things you enjoy. You improve your net worth and eliminate financial stress.
Savings at the Supermarket
If you head off to the store, blind, chances are you will spend money needlessly. Follow a few simple steps to reduce your grocery bill and keep more of your money. Make a list and then go online to check the weekly fliers of the supermarkets within a 5-10-mile radius. Most times, they don’t have the same items on sale, which benefits you, the consumer. It’s also smart to use coupons and buy store brands when possible to enhance your savings.
Being smart with your money by using cash instead of buying on credit and looking for savings on everything, will give you the tools to live life debt-free.