Americans get more and more in debt each year. Debt begins to pile up from credit cards and loans. This high interest debt can quickly turn into a seemingly insurmountable problem forcing you to live from paycheck to paycheck. The tips listed below will help you stop the urge to splurge and enable you to actually start saving money every month.
*Create a monthly budget and stick to it. This way you can keep track of where your money is actually going and apply it to where it is needed. Putting the numbers down on paper will show you just where all your money is going!
*Keep a journal for a week of everything you spend money on. Keep a running tally of how much you spend for a week. Then multiply this times twelve and you have your total for roughly three months.
*Get your last three months of pay stubs and determine your average monthly income by adding the totals, after taxes, together. Then gather three months of bills, add them up and divide by three to calculate your monthly fixed expenses such as rent or mortgage, utilities and phone, car payment, insurance and student loan payments. Add together three months of other monthly expenses, including groceries, clothing, credit card expenses, medical bills and the total from your weekly journal above. Divide by three and add the result to your monthly expense total.
*Evaluate your expenses. What can you cut back on? That morning cup of coffee can be skipped if you make your own at home. Small priced expenses add up and burden us. Choose one or two things you can skip from your journal and then add one item to the list every week.
*Make more meals at home. Take-out is not only fattening, but it is expensive. Pack your own lunch to take to work. Make meals ahead of time and freeze them if you don't have time to cook a dinner every night. Keep in mind that not every meal needs to be a feast. Have a salad, sandwich, or other small meal for dinners, instead of the five-course meal.
*Set up a savings plan such as a passbook account, certificate of deposit (CD) or individual retirement account (IRA), and begin making regular deposits. Check with your local bank to see what the best option is for you.
*Cut up all credit cards except one (you need one for emergencies). Transfer all credit card debt to that one card (make sure it’s the card with the lowest interest!). One bill is easier to manage, especially at low-interest.
*Overpay your minimum credit card payments as much as possible. A good rule to follow is to add whatever your interest fee is for the month to your minimum payment. This way you will be paying on top of your interest and your balance can actually go down instead of just being marginally affected.
*Realize that things come up in life that are completely unexpected and unplanned for. Car problems or health problems can and will occur at the moment you think you’re ahead. Keep plugging away at debt and stick to your budget as much as possible.
*Watch less T.V. (no home shopping channels) and no buying online, no catalogs. All of these increase the temptation to spend your hard-earned money!
*Buy generic, clip coupons, pinch those pennies!!! (roll them, too!)
*Cook large amounts of food at a time from scratch, as well as several different meals. Pre-packaged stuff costs a lot more and it's not as healthy, anyway. Freeze portions for meals later, during the week or when things in the pantry are scarce. This will also save time, and energy.
*Grow your own! Create a garden! Not only is it fun for the whole family, you can save a lot of money on food.
Once you have paid off most of your debt, you will begin to feel more in control and can start pooling more of your money into savings, college and retirement funds. Try to have an emergency fund that could carry your household for at least two months in case your income stops. That way, your debt will not begin to pile up again.
You pay your bill off completely every month. You pay the minimum due every month, and you let a manageable amount revolve on your credit card. You pay the minimum due every month and your credit cards hover near their maximums. These are all payment profiles, one of which probably fits most credit card users, and there are a number of different credit cards that are tailored to offer the best value for any one of these scenarios. Match the right card with your spending and payment habits and you maximize your savings. Fail to do so and you might spend hundreds or even thousands of dollars needlessly.
You might be one of the hundreds of thousands of consumers who are spammed weekly by credit card vendors either by email or regular mail, and if you've chosen a credit card from the selection that has shown up in your mailbox you've probably not chosen the best one available for your particular spending pattern. Credit cards are big business today. Credit card vendors offer a huge array of incentives to lure your business. Four of the most common of these are cash back rewards, award point good for travel services and merchandise, 0% balance transfers and low interest on outstanding balances. Some even offer you the ability to custom design the picture on the card!
Whether you are interested in a credit card or not, when you get an offer in the mail check out the Truth in Lending Disclosure. Every credit offer contains one - it is required by law - but they can sometimes be a challenge to find in all of the marketing drivel included in the offer. Make a game out of reading the disclosure before discarding - it's fun! Pay particular attention to the interest rate that they're offering - it's usually high, and isn't even close to the best deal that you can get if you actively shop for credit cards. As a matter of fact, some of the interest rates are downright predatory! Whatever the interest rate is, find it, have a look at it, have a laugh and then throw it away. The best place to shop for real credit card deals is online. You can compare products head-to-head there, and it's convenient.
If you look carefully you will find that most credit card offers that you receive focus their sales pitch on one of these four types of rewards: low interest, cash back, award points, 0% balance transfers. Furthermore, whatever area of their focus, they don't perform well in the other three and may actually be extremely predatory in one or more of those areas. Here are some tips you can use to make sure that you choose the right credit card for your payment and spending profile:
1) Do you have a history of paying off the complete balance on your credit card every month? If so, you shouldn't be too concerned about the interest rate on your credit cards. However, don't discard interest rate completely! Keep the grace period in mind - that's the amount of time between when you purchase something with your credit card and when the bank begins to charge interest on that purchase. Often credit card companies charge interest beginning on the date of the purchase - others offer a grace period that lasts until the end of the calendar month, or for 30 days. A longer grace period can help you save money. Also, if you have balances on other credit cards that are charging interest, a card that offers 0% interest on balances transfers may be the choice for you. Or choose a card that offers reward points - your next vacation could be free!
2) A majority of credit card users maintain a manageable balance on their credit cards, usually drifting between zero and forty percent of the credit card maximum. If this is typical of your usage pattern then the interest rate offered should be of concern to you, but you may want to also take advantage of some of the other benefits offered such as cash back on purchases. This is a good, convenient, responsible use of your credit, and makes you an attractive customer to credit vendors; you prove that you are a good credit risk, you pay your bills in a timely manner, and you maintain a positive balance which makes you a good customer.
3) Don't depend on credit card marketing material that comes in the mail to help you find the best deal - shop for credit cards that offer the very lowest interest rate available, and the easiest way to do this by far is on line. If your credit cards are always max'd out - at or near their limits - then interest is everything. You should absolutely find the card with the lowest interest rate available. You might even choose to pay a small annual fee to secure a card with a lower interest rate than you might find with a fee-free credit card. With a low interest rate you can take control of the flow of interest that you pay on your outstanding balance.
4) In all cases, whether you maintain no balance on your credit cards or the maximum available, you need to be sure to make all payments on time and in the right amount. Many credit card vendors will increase your interest rate if you make payments late - it's in the Truth in Lending disclosure statement - and they do it without giving you any notice. Read your statement carefully every month to make sure that you know what you're paying.
As with most financial dealings, an informed consumer stands to save money. In the case of credit cards the amount of money that you stand to save by optimizing your credit cards to your payment and spending habits can amount to hundreds or thousands of dollars per year. Get in a habit of reviewing your credit cards and shopping for better deals on a regular schedule; you can almost always find a better deal than the one you've been sitting on for the past year.
Both Chris Chenoweth & Kris Calusa are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Chris Chenoweth has sinced written about articles on various topics from Nutrition, Affiliate Programs and Credit Cards. Chris Chenoweth writes articles pertaining to diet, health, and business.. Chris Chenoweth's top article generates over 90500 views. to your Favourites.
Kris Calusa has sinced written about articles on various topics from Credit Cards, Build Online Business. The author has made a living helping individuals with their credit needs and options for over twenty years.. Kris Calusa's top article generates over 8100 views. to your Favourites.