While an opinion outpost might be a quick way to generate extra cash, it likely won’t solve your financial woes if you continue to live beyond your means. Spending more money compared to what’s coming in is no way to live, and you can’t sustain that sort of living arrangement for long thought slipping deeper into debt, and the longer is goes on, the less likely you are able to come out without huge financial implications such as a lower credit score, missed payments, or even bankruptcy. If you feel like you are starting on a path of financial destruction, now may be the time to correct any mistakes before it’s too late. With a few changes in money behavior you can be on the path of financial independence before you know it, never looking back.
Set a Budget
It’s sort of surprising that experts have said that two-thirds of the population don’t use a budget, which means that most are on a spending free for all. If you asked yourself what you are currently spending on food, gas, entertainment, not to mention what your monthly bills are, would you know? Without knowing what you are currently spending, not to mention what you should be spending, it can be hard to cut back.
Build up a Cushion
If you had a major expense come in such as a vet bill, auto repair, or even worse, if you lost your job and needed funds to float you for a few months, would be able to afford it, or better yet, how would you pay for it? Most would probably say a credit card, which means then you are now paying interest and monthly payments until the debt is gone, throwing your budget out of whack. If you can save up a few months of expenses into an emergency fund, you can give yourself a cushion if any unexpected charges come in and it will not set you back financially for what could be possibly months. Think of it as a huge rainy-day fund.
Stay Out of Debt
Spending of putting on a credit card, spending what you are able to afford each month really comes into play when you get the monthly statement coming due. If you are not able to payoff the statement balance by the due date you will be charged interest, and depending on the card, could be upwards of 16% APR, so as the balance rises that’s a significant amount of interest that you are now responsible. As your debt rises your credit score will decrease as well, so if you find yourself with a large credit card balance it’s important to make as large of payments as you can afford until it’s gone, transfer the balance to a lower interest card, or even look to a personal or home equity loan with lower interest and regular monthly payment amounts.
Earn Free Money
We spend so much each month on expenses so why would you leave free money on the table if it’s available. If you are able use a credit card responsibly, you can actually earn points or cashback on purchases that you were going to be making anyways, by using a rewards credit card. Sticking with your debit card or current credit card could be missing out on hundreds of dollars a year in gift cards, hotel room credits, or cashback to you to use as you please.
Track Spending
As discussed regarding a budget, if you don’t know every dollar going out, or coming in for that matter, it gets difficult to say for sure what you need to cut back on, in order to free up extra money. If you take last month’s debit or credit card statement you can go line by line and see where your hard-earned money is going. From there you could actually take it a step further and put into categories of what were necessary monthly expenses, and what could have been avoided. That could give you extra motivation to watch spending and that maybe avoiding going on a shopping spree can help use that extra money to pay down debt, build the emergency fund, or fund your retirement account. It’s not an easy task, and certainly you should enjoy life experiences, as saving every penny and staying inside isn’t the answer either, but there is a line between spending too much and too little, you will just have to see what works for you and your financial situation.
