UNITED STATES—It’s 2015, and it’s almost a given we’ve all made resolutions that might have already been broken. Then again some of us might have had those resolutions stick (at the current moment). One of my resolutions was to get my finances in order.
Yes, money the root of all evil, but at the same time the one thing we all need to survive. It’s no easy task to climb yourself out of debt, but you have to know what your outstanding debt is to control it. First and foremost, plastic is dangerous! Yep, I said it. People have to remember with credit cards its money that doesn’t belong to you. You’re borrowing it, and guess what: it has to be paid back.
The more credit cards you have, the more inclined you are to use them. Before you know it, the balances on your cards can reach levels that seem almost impossible to pay off. Here is where strategy comes in. First, focus your attention on paying off the card with the highest interest rate.
Remember that is the killer with most credit card debt, it sometimes seems like you can never climb out the hole. The key to paying off credit card debt is to NOT use the card, but to also double what you can pay if possible. Paying the minimum due is just like paying off the interest. So the balance never drops.
If you do happen to HAVE to use that card make sure it’s reserved primarily for an emergency and not a want. You know what I mean, those things you think you just have to have when in reality you don’t. Even if you can’t double the payment, always paying more than the minimum due is crucial to knocking down that debt.
So how can you track all of your finances? Well if you’re computer savvy you can utilize an Excel spreadsheet to document your expenses. At the same time this allows you to document your income. This is a critical point. You need to know what is coming in, just as much as what is going out. This allows you to better understand what you can spend during the month on miscellaneous things or to put away in savings.
I don’t believe in the notion of save, save, save. I believe in the notion of save, save and spend a little on you. If you work, you’re entitled to treat yourself to something minor each pay period. If you opt not to, take what you’ve saved and then put that towards a larger item that you are hoping to purchase in the near future.
Keep receipts. Why? It helps you better understand the damage you did during the month or the year. This is important for having a better grasp on where money may have gone for things you didn’t account for in your budget like coffee stops, fast food, household items, treats, etc.
We sometimes spend as much on coffee as the cost of the phone or cable bill for the month. You know what that means; try to cut that unnecessary expense a little. That’s money that you can use towards something else in the near future.
Another problem so many of us face is the issue of borrowing. This is something that can be troublesome for some people, especially if you have friends and family who think of you as their personal ATM. You’re not an ATM and you have limits, its okay to enforce those limits. If people get the perception they can always come to you, when you really don’t have it, but you give it to them anyway, it could hurt you.
For example, those people who say ‘borrow,’ but never payback. That’s funding that you may have been expecting to get back that you didn’t. Don’t allow this to become a trend, if someone becomes a habitual liar about not paying you back you have to lay down the hammer: sorry, but I can’t help you this time. They’ll get the point that if you borrow they have to payback. You don’t just have money to frivolously give away without getting it back, especially if you have debt.
Money management always starts with the individual. Know what you can handle and what you can’t and don’t try to over extend yourself. Set a budget, create a plan, and make sure you follow through on it. Your psyche and your bank account will thank you later!