Advertising
Advertising

How to Stop Letting Your Money Control You

How to Stop Letting Your Money Control You

    Money is a mystery to many people and when I got out of college I was no exception. I knew I made a decent wage and I could afford to live but I never seemed to have any extra at the end of the month. When a large, unexpected expense would arise, I was sent running to my parents…or to my credit card. I had no control of my money; it was controlling me.

    To control your money, you have to ask yourself a simple question: Where is my money going? Once you begin to understand where the money goes, it’s easy to track and manage it.

    Advertising

    Where is my money going?

    The first step is to figure out where your money is going. All of your money goes to one of two places: fixed expenses or variable expenses. Your fixed expenses are going to be things like rent, utilities, student loans, insurance and car payments. These expenses are the same amount every month and ongoing.

    Variable expenses are everything else like groceries, restaurants, clothing and entertainment. All of these things can be planned and controlled.

    One of the best things you can do to control your money is to create a Bills Calendar. Since I use Google Calendar, I made a new calendar called “Bills” and added all of the fixed expenses for the month. (Don’t forget any yearly expenses like Amazon Prime or XBOX Live, for example.)

    Advertising

    How do I control my money?

    Now that you know where your money is going, you can control your money with a budget. Yes — budget is a scary word. It was for me too.

    Start with looking over your bank statement and listing all of your expenses for a month. Similarly, if you use Mint, this becomes even easier. Make a note of the categories you’re spending money and how much you’re spending each month. It’s good to look back at least 3 months, but the longer you look back the better idea you’ll have of what you’re really spending each month.

    Next, find one of the many budget templates available online and fill it out. You won’t use every category, so just you what applies to you.

    Advertising

    The biggest misconception I had about budgeting was that once I set it up, I had to live by it to the cent. A budget is a living document. It is meant to be updated and corrected until it is a true representation of what you’re spending. I review my budget every other month and make corrections as needed.

    Automate your money

    When you’re living paycheck to paycheck, the idea of Billpay is scary because you never know if you’ll have the money for the payment when it’s due. Now that you control your money, Billpay can save you money and stress.

    Many bill payees (such as auto insurance and student loans) will give a small discount if you sign up for their auto payment system. In addition, if you know your fixed expenses are taken care of, you will never pay another late fee again.

    Advertising

    Now that your bills are under control it’s time to pay yourself. When you’re 21, the idea of retirement is a lifetime away. You don’t see a need for savings or a 401k or anything your parents worry about. But it’s never too early to start saving.

    Pay yourself

    I look at my savings account as paying myself. Sure, I get a paycheck from my job, and I “give” a lot of it away. But I need to keep some of that money for my “future self”. I need to have money for car repairs, medical bills, or even a new computer or vacation.

    I cannot emphasize how much less stressed you’ll feel when you start paying yourself and helping out your “future self”. Take a percentage of your paycheck and put it into savings automatically. You can set up a recurring transfer with your bank to move money into savings every paycheck, or you can set it up through direct deposit with your employer if you use a different bank with a higher-interest savings account.

    (Photo credit: A Calculator and Statistics via Shutterstock)

    More by this author

    How To Communicate With Irrational And Angry People Save Money: Upgrade Yourself Measure Twice, Cut Once: The Importance of Project Planning Change…The Only Constant Review – Lose It

    Trending in Money

    1 How to Nix Your Credit Card Debt in Less Than 3 Years 2 Top 5 Spending Tracker Apps to Manage Your Budget Smart in 2019 3 How to Use Credit Cards While Staying Out of Debt 4 How to Use Debt Snowball to Get out from a Financial Avalanche 5 How Personal Finance Software Helps You Get More Out of Your Money

    Read Next

    Advertising
    Advertising
    Advertising

    Last Updated on April 3, 2019

    How to Nix Your Credit Card Debt in Less Than 3 Years

    How to Nix Your Credit Card Debt in Less Than 3 Years

    Debt is never a fun thing to be in. But, there are many actions that you can take that will help you rid yourself of the burden of debt once and for all.

    By coming up with a set plan, eliminating your debt can feel much easier than constantly thinking about it.

    This post will provide some tips on how you can do this to help you nix your credit card debt in less than 3 years.

    Hint: there are ways that are easier than you think.

    1. Consider Consolidating Multiple Credit Cards If Possible

    This may not be applicable to you, but if you have multiple cards – it is something to consider. Keeping up with multiple bills is time consuming.

    It will depend on the balance you have on each. Consolidate ones you can but do not do it to the point that you get too close to the maximum limit. Also, it is ideal to pick the card with the lower interest rate.

    Consider if there are any fees or alternatively, rewards, with transferring a balance to another card. Watch out for fees. Note that some cards offer rewards for transferring a balance to them. This is extra cash that can help go towards paying off your debt.

    Advertising

    Having one or two cards can make nixing your debt much simpler than keeping up with the balance of a bunch of cards. Keeping track of paying the minimum towards a bunch of cards is time consuming. Spend the time to consolidate instead to make the overall process simpler going forward.

    My tip: Have one main credit card. Have a second one that you use for necessities – such as groceries or gas – that offers rewards for those purchases (a lot of cards do) and set the second one on auto-pay. You should be able to pay off a smaller amount on auto-pay if it is a necessity. If you think you cannot, then you may need to cut down a lot on expenses.

    Why do I suggest doing this? Having one thing set to auto-pay is one less thing to think about. One less thing to waste time on. Same idea with consolidating to one main card. Tracking down too many is a hassle.

    2. Try to Pay the Full Balance You Spent Each Month at the Very Least

    You need to pay off the amount you are spending each month when that bill comes in. This is the amount you spent THAT month.

    Do not let the debt keep accruing while you work on paying any unpaid debt that has accrued. It will become a never-ending battle. Try as best as you can to be current on paying for each month’s expenses when that month’s bill comes out.

    If this is a strain, consider why. You may need to cut expenses. Or you may need to consider other cards. Or look at where this money is going.

    3. Pay Extra When You Can – Every Small Amount Counts

    This cannot be emphasized enough. If you are looking at a lot of credit card debt, it can look daunting, but each extra amount that you can put towards the debt will really add up – no matter how small it is.

    Advertising

    It does not just reduce the principal amount that you have left to pay off, but it reduces the amount that is collecting interest. You will always save money with that reduced interest.

    4. Create a Plan on How to Pay Extra

    Back to the main point, having this plan is giving you one less thing to think about.

    This plan should be a plan that works for you. If it does not work for you, your spending habits, and your views on debt, then it will not be an effective plan.

    For instance, if a set plan of an extra $50 (or another amount that you know you can afford) works for you, then do that. Set that aside every month and pay that extra amount. Treat it like a bill. Choose an amount that works for you and pay it like clockwork as though it was a bill you had to pay each month.

    Little amounts will not nix it entirely, but they will help tackle it and having a set plan can make it less of a chore. Creating a new plan of how much to put towards it each month is an unnecessary added stress.

    5. Cut out Costs for Services You Do Not Use

    If you are signed up for subscriptions that you do not use because of some free trial or for some other reason, cut it out. Your overall financial position will look better.

    In turn, that will make cutting your credit card debt easier. Look at your statements to find these expenses. If you do not use them, you may forget you are paying some unnecessary amount each month. Cutting it out can really add up in savings that you can put towards other needed expenses.

    Advertising

    6. Get Aggressive About It

    Consider these points:

    Depending on the interest and the level of debt, you may need to give up a few indulgences. For example, instead of ordering delivery or going out to eat, cook at home. Everything adds up.

    Other things may be more of a sacrifice. It may be a trip you wanted to go on, or a daily latte habit you’ve picked up. In these instances, consider how important it is to you and if it’s worth the sacrifice. And if it is a costly expense, think whether you can wait to indulge.

    Cutting an extravagant expense can really help make a dent in your overall debt. Try not to add to debt when you are trying to pay it off. It will be a never-ending battle. Make it less of a battle with these tips and it will feel easier.

    Bottom line: Do what you can to make this process easier for you. Implement steps that do this. It takes time now, but will help overall. Also, keep track of your spending and paying down of your debts. Which is the next point.

    7. Reevaluate Your Progress at Set Intervals

    Doing a regular check-in can help you see your efforts pay off or maybe indicate that you need to give this a bit more effort. If you check every 3-6 months, it will not feel so much like a chore or feel so daunting.

    By doing this, you will be able to better understand your progress and perhaps readjust your plan. Bonus: if you see it pay off, it will feel great to do this check-in. You will get there.

    Advertising

    Finally (and most importantly)…

    8. Keep Trying

    Do not get discouraged. Pushing it off will make it worse. Just keep trying.

    Once your debt becomes lower, each monthly payment will reduce the balance more. Why? You are paying less towards interest. It will be a snowball effect eventually and it will become much easier to manage. Just get to that point. And know once you do, it will feel easier and motivating.

    Start Knocking out Your Debt Today

    The best way to eliminate debt is to get started right away. Begin by implementing the above steps and watch your debt just melt away. Try out some of the above strategies and see what works best for you. Soon you’ll be on your way to a debt free life.

    More Resources About Better Money Management

    Featured photo credit: Pexels via pexels.com

    Read Next