Advertising
Advertising

4 Insightful Tips to Control Your Spending Habits

4 Insightful Tips to Control Your Spending Habits

Are you in debt? Are you always struggling to save money for the things you really want? Well, you’re not alone, many people all over the world are facing the same issues right now. No matter how hard they try, it’s never enough.

What’s curious is that even when they get a promotion (and earn more) and come across a big sum of money, they quickly return to the same situation. Why is that? The problem is not how much money you have, it’s your spending habits. It’s easy to think you’ll fix your problems by earning more money, but the truth is that you just have to spend wisely.

It’s easier said than done, I know, but if you’re reading this you’re willing to change and that’s the first step. I wish I could give you a quick, simple and easy solution, but there’s no such thing. It’s hard work, but it’s not impossible.

1. Ask Yourself Why

To be fair, you always should be assessing your purchases, but it’s even more important to do it when you’re about to buy something. You see, impulse can make us do things we’ll regret as we only think about the consequences afterwards.

Advertising

When you ask yourself why you’re buying something, you’re immediately reflecting about it. “Why am I buying a new (insert item/experience)?” The majority of the times you won’t find a decent reason for this question.

Why are you buying a new smartphone? Is there something wrong with the one you have right now? Why are you buying a new pair of jeans? Are the old ones broken? Or are you worried about what others might think if you repeat an outfit? Why are you going out (again)? Are you really going to have a nice time or are you afraid of being lonely? And not finding Mr/Miss right?

The point is: once you understand the underlying reason for your spending habits you’ll see that nothing will change by buying something. There are other ways to “solve” your problems without breaking the bank.

2. Have a Budget

Whether you have a daily or weekly budget, it doesn’t matter, as long as you have one. Ideally, you should never go over budget, but if you do, it’s not a problem, as it’s hardly the reason for having one in the first place. When you have a budget you’re forced to think about every purchase you make. So all of a sudden it’s not a matter of choosing, picking, paying and leaving – it’s a decision that’s going to affect something else.

Advertising

It’s even better to tie this budget to something that’s meaningful to you. It could be a long due trip to an exotic place, a replacement of the malfunctioning car or to reduce your ever increasing debt. When you start looking at the broad picture, you’ll stop your meaningless purchases in order to keep within budget and achieve whatever your goal is.

3. Don’t Spend Money That’s Not Yours

How many people do you know with massive credit card debts? Or people who ask for a bank loan as soon as they finish paying the last one off? It’s hard to say “no” to money that’s readily available, but it’s a mistake to believe that money is yours.

Credit is great if it’s used with a purpose and a well-defined plan – like starting a business for instance. It’s also a cushion to fall back on in case of an expected emergency. However, if you’re not in dire need, you should never use credit cards and overdrafts frivolously, or you end up paying the (hefty) consequences.

So if you’re getting to the end of the week or month and you feel you might not have enough money for rent, is it wise to buy a new top/t-shirt on your credit card? Shouldn’t you wait until you have the money to pay for it? The concept is simple: if you don’t have the money, don’t spend it. The more you get yourself in debt, the harder it is to get out. And when you add up all the money you’re paying in interest throughout the year, you’ll quickly see the problem you have.

Advertising

4. Be Willing to Change

One of the main reasons why people carry on with their financial problems is because they don’t want to change their lifestyle. You know that one of the definitions of insanity is: doing the same thing over and over again and expecting different results.

How many times do you eat out a month? How many times do you order a takeaway? Do you know how much money you could save by cooking at home? And before you say you cannot cook, remember that with practice you can achieve (nearly) everything. Do you drive to work? Do you need to? Have you considered selling your car and cycling to work? With services like Uber, Blablacar or Co-wheels/Turo, you’ll always have a car available to you.

People always dread a change of lifestyle; it seems like it’s not only a matter of comfort, but it’s also related to pride. A person might choose to get in debt and go to the gym with their friends, instead of exercising at home and looking like they don’t have money.

At the end of the day, you and you only know the problems you have. If you think your spending habits are not really affecting your life, I suppose there’s not much to worry. However, if it’s getting to a point where if you don’t take action things might start to fall apart, then you have to take it seriously.

Advertising

Do you have problems managing your money? Have you found a solution? Share in the comments below.

Featured photo credit: Alejandro Escamilla via hd.unsplash.com

More by this author

Guilherme Ribeiro

Freelance Writer

Running on a rainy day 5 Tips to Encourage Habit Creation 4 Insightful Tips to Control Your Spending Habits

Trending in Money

1 How To Pay Off Credit Card Debt Fast: 7 Powerful Tips 2 How To Make a Million Dollars in 7 Steps 3 7 Cheap but Powerful Products That Can Help Your Waste Less Food and Save Money 4 How To Retire Early (And What To Consider Before You Do) 5 How To Create a Budget (The Complete Beginners’ Guide)

Read Next

Advertising
Advertising
Advertising

Published on January 8, 2021

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

Ever wondered whether your credit card debt is the reason you’re in a bad financial situation? You can’t enjoy any fun activities because a good chunk of your money goes toward debt payment. Heck, you’re even behind on some of your monthly bills.

The effects of clumsy debt management are too many to list here. This guide is going to help you discover how to pay off credit card debt fast and start chasing your financial goals.

Debt problems are the last thing anyone wants to encounter. But things can get out of hand when all the “little debts” you take accumulate in interests.

What if you knew some simple and proven ways to be debt-free quickly? Implementing them would mean better financial health for you. It becomes possible to free up cash for your “wants.” These include taking a trip or buying something you’ve always desired. All that while paying your bills on time!

Let’s not wait any longer. Here are 7 powerful tips for paying off credit card debt fast:

1. Pay More Than the Minimum Credit Card Payments

Many people only pay the monthly minimum on their credit cards. Truly, that’s the right amount for staying on good terms with your credit card company. But you need a different approach if you’re looking to achieve financial independence within a short time.[1]

Most of your payments go toward interest costs when you only pay the minimum amount. A substantial sum of your balance remains standing. As a result, it becomes more expensive to eliminate your debts.

Advertising

You don’t want to wait more than 10 years to get rid of debt while it’s possible to do it sooner. All you have to do is double that $100 minimum payment to $200 or go higher.

The good thing is that minimum credit card payments are affordable in most cases. By paying a higher amount, you reduce your interest costs, lessen your borrowing period, and boost your credit score.

2. Start With High-Interest Credit Card Debt

If you have more than one credit card debt, prioritize putting the extra money toward the ones with the highest interests. This debt pay-off strategy, known as the debt avalanche method, is essential for being debt-free quickly.[2]

First, you need to list down all the credit card debts you have in the order of their interest rates. Next, you choose the one with the highest interest and pay a significant amount toward it each month. It can be an amount twice or even thrice larger than the minimum payment.

At the same time, you make monthly minimum payments on the other debts. Their interest charges won’t be as costly as that of the first debt on your list. You only move on to the next high-interest debt after the first one is gone. Remember that your focus is on the interest rates and not the balances.

3. Revisit Your Budget

Budgeting is useful for tracking your financial moves. Once you create a budget, some tweaks along the way can make it work for you better. One situation that requires you to revisit your budget is when you’re struggling with debts. It might hurt a bit to slash some expenses. But you also don’t want to miss out on achieving financial freedom in the long run.

You can reduce some variable expenses to free up more cash for credit card debt payments. They’re the ones that change from time to time. Some examples are groceries, fuel, and clothing.

Advertising

Other opportunities for cutting down your spending lie in non-essential expenses. Instead of dining out all the time, you can cook at home more to save money. You can also share some subscriptions with friends and pay a fraction of the cost.

If you’re determined enough, you can eliminate all your unnecessary expenses and focus on paying off your credit card debt first.

4. Avoid Using Your Credit Cards

Do you want to know how to pay off credit card debt with a low income? One simple way is to stop using them. Having your credit cards everywhere you go means that you’ll be more tempted to buy unnecessary stuff. In this case, you spend money that you don’t really own and get deeper into debt.

The quickest fix to stop the debt build-up is spending with cash. You’ll be more aware of everything you can afford at any particular time. If you decide to keep one or two cards to ease the transition, always make wise choices. For instance, only use them when experiencing financial difficulties.

It’s best to categorize your fun activities under “discretionary spending” in your budget. This way, you won’t need more debt to kill your boredom. By halting your credit debt from accumulating, it’s easy to pay down what you already owe and be happy with the progress.

5. Start a Side Hustle to Boost Your Income

You’re probably turning away a lot of money by not monetizing your skills. Everyone has something that they’re good at doing. And you can use that to generate extra income for attacking your credit card debt.

If you look around your neighborhood, you can find several side hustle opportunities. It can be pet sitting, tutoring, or lawn mowing. You can start an online business by offering services such as digital marketing, content creation, and web development. Such skills go in high demand on freelance sites and job boards.

Advertising

Finding clients on social media is also a good strategy to utilize your skills and make more money. Facebook groups, Quora Spaces, and subreddits are some places to look for side jobs. You only have to join a niche-specific platform, share your services, and respond to any opportunities.

It’s possible to learn a skill, practice it, and earn from it. Use the free resources online or purchase some e-courses to get started.

6. Sell Your Used Items for Extra Cash

Starting a side hustle isn’t the only way to generate extra money. You can turn unwanted items into cash for paying off credit card debt. Whether it’s an old TV, book, or furniture, there is always someone itching to buy your used stuff.

A garage sale, as much as it’s old-fashioned, is perfect for getting your neighbors and passers-by to buy from you. You keep all the money because there are no business permits or taxes involved. While you may not make much cash, it’s better than leaving your stuff to go defunct in your storage.

Other than that, you can sell your used stuff on online marketplaces. Facebook groups are great places to start if you want quick approvals and hence sales. You only have to ensure that your listing follows Facebook’s commerce policies.

When selling any pre-owned items online, ensure they’re in good shape to avoid problems with your buyers.

7. Know When to Seek Help With Your Debt

Asking for help with your credit card debt can be challenging to do. But letting it drown you is a road you don’t want to take. While you may feel embarrassed at first, it’s the best way to get back on track when you run out of options.

Advertising

There are tons of non-profit credit counseling organizations that can offer you free guidance on how to escape the debt trap. An example is The National Foundation for Credit Counseling. They simply review your finances and help you determine the source of your financial problems. After that, they match you with an actionable debt management solution.[3]

In extreme cases, the debt solution can be:

  • Debt relief – where your debt is partially or wholly forgiven
  • Debt consolidation – taking out one loan to repay others
  • Debt settlement – the creditor forgives a significant portion of your debt
  • Bankruptcy – legal process for seeking relief from some or all your debts

It’s necessary to carefully weigh your options before deciding on the way to go. Find out how it might affect your credit score and any other risks.

Wrapping It Up

Debt is a major setback when you’re trying to prosper in life. Paying off credit card debt is essential if you want to reach your financial goals. That means having more free income, a good credit card score, and even a chance to retire early. You become more productive each day because of the peace in your mind.

So, you now have some tips on how to pay off credit fast. Go ahead and get rid of that good life progress killer!

More Tips on How to Pay Off Debt

Featured photo credit: rupixen.com via unsplash.com

Reference

Read Next