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5 Budgeting Tips That You Should Never Miss

5 Budgeting Tips That You Should Never Miss

Who doesn’t want to feel more comfortable, less stressed out and be able to afford occasional luxuries, like travel, gadgets or some nice clothes?

Your finances can impact all areas of life, and can even put an unnecessary strain on your love life, so it is a good idea to learn a few useful things about effective budgeting. Living within one’s means isn’t all that difficult, nor does it require huge sacrifices – you just need to be realistic, ambitious and motivated to make some positive changes. Let’s look at some practical examples of things you can do to put a rein on your finances and start being more strategic with your spending.

1. Focus on prevention rather than the cure when it comes to maintenance costs

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Car broke down

    You see people do this with their health, their home and their car – they neglect regular maintenance and make do, until the moment something goes terribly wrong and they are forced to remedy the problem quickly. The problem here is that if you allow a small problem to grow out of control, you can end up spending a whole lot of money trying to fix it.

    Let’s say your car is chugging along just fine, but you’re not the first owner and have had it for a while. You may notice small problems creeping in if you just do some regular car maintenance, like replacing worn down parts, changing the oil and having a general checkup from time to time. These principles can be applied to any aspect of life – regular maintenance is a huge money-saver in the long run.

    2. Make sure to pay yourself for all the hard work you do

    Sometimes finding a bit of extra money in your budget that you can stash away is just a matter of perspective. Don’t see it as taking some money away from a salary that already has to cover plenty of expenses, think of it as paying yourself for the amazing job you do every single day. As financially savvy people have pointed out before, establishing that your comfort and financial security are a priority makes it easier to justify saving a decent part of your total income.

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    It can be as simple as taking about 5% of your income off the top as soon as you get your paycheck and putting it in a savings account. You can make such payments automatic, which is easier than always trying to resist temptations, and you can slowly increase the amount you set aside as you get more experienced with managing your budget.

    3. When you need something done, do it yourself

    Home repairs

      While certain goods and services are fairly complex and well beyond our own skill level, with many things paying top dollar is more about convenience than anything else. If you buy in bulk, look for sales and cook your own food you can save a substantial amount of money, but it will require some effort on your part.

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      In the same vein, if you devote some of your time and energy towards developing some basic DIY skills, you can take a few fairly inexpensive supplies and make whatever you need. Taking the time to learn how to do some basic repairs yourself is also a good idea. Creating a small monthly DIY budget allows you to stock up on supplies and tools needed for all the crafting and repairs you’ll be doing.

      4. Keep your monthly budget flexible and you won’t break the bank

      Now, as far as your income, in a majority of cases it stays the same throughout the year or is at least fairly consistent. This means that you either have to make some more on the side or rearrange your finances from month to month to face new challenges or afford certain luxuries without having to dip into your emergency fund or stall your savings.

      The simplest way of going about it is to do some budget fine tuning – e.g. if you want to buy a new TV or a fancy pair of shoes, you may have to eat out a couple of times less. Some expenses pop up every two or three months and some are seasonal, so you will have to divert funds from other areas during those periods.  The story of John Steinert, a man in his mid-twenties who is just about to pay off all his student loans and is on a good track to retiring before sixty, shows that you can manage to live comfortably while saving, just as long as you have a good plan and keep things flexible.

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      5. Expect the unexpected costs

      Injured Piggy Bank WIth Crutches

        Last, but certainly not the least, you have to have some kind of buffer, which allows you cover unexpected costs without needing to take out a loan or raid your primary savings account. As we already noted, regular maintenance costs should be covered by your monthly budget – e.g. problems with your car’s engine or a serious case of mold in the attic fall under maintenance costs as they are something you should expect to deal with from time to time.

        Unexpected costs include things like a long hospital stay due to injury, a friend announcing that he or she is getting married out of the bloom, theft, your phone falling down a flight of stairs and breaking, etc. Chances of things like this happening are not that high, but there are plenty of little things that can go horribly wrong, and you need an emergency fund separate from your main savings account to help you deal with these problems as painlessly as possible.

        Applying these tips in your day-to-day life will help you cover the broad strokes of your financial planning, but it is ultimately up to you to set priorities and fine tune your budget. With a bit of luck, you’ll be well on your way to achieving financial stability in the next couple of years.

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        Ivan Dimitrijevic

        Ivan is the CEO and founder of a digital marketing company. He has years of experiences in team management, entrepreneurship and productivity.

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        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.

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        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.

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        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.

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        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.

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        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

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