“According to the New York Federal Reserve, household debt approached $14.15 trillion in the fourth quarter of 2019. The total is now $1.5 trillion higher, in nominal terms than the previous peak of $12.68 trillion in the third quarter of 2008.”
Has staying within your financial range always been a task for you? Are you in the vicious loop of incurring debts and paying back by taking more debt since you don’t have enough money? Are you trying your best but still don’t know where you are going wrong?
Student loans, personal loans, and credit loans – are a lot to cater to every month. We possibly have all had to deal with all kinds of loans at some point in our lives.
One must be aware of the real-time circumstances instead of just daydreaming about living your best life. The physical manifestation of the good life is impossible if you do not get a grip on managing your finances.
To live a life full of financial harmony, here are some of the ways to manage your expenses and pay off your grueling debts:
Say No To Your Credit Card
No doubt credit cards come in handy in emergencies. You can use it when you are short of cash or have any security issues. But bank interests are expensive and using a credit card frequently can add fuel to the fire. If you want to do your weekly grocery, take some cash with you instead of using a credit card. Halt your credit card activities since it is never worth it to do something that would cost you your peace of mind and security.
Track Your Annual Expense Amounts
Take a look at your past few months’ spending. Observe your bank statements, and now make a list of your major and minor yearly expenses. You will get clarity on where you need to spend and where you are overspending.
Create a Separate Savings Account
Keep one thing in mind: unless you do not save enough, you will get out of debt. Save first and then spend what is left – not the other way around.
Whatever your income levels are, you can always start small to build saving habits.
Begin by holding off on spur-of-the-moment purchases that appeal to you, and save them instead of spending them on something you do not need. Save all the money for emergency funds instead. Emergencies can be expensive and are no respect for your financial status.
Therefore, tracking your expenses is essential and should not be regarded as a one-time task. One has to be consistent in making sure the money is spent in all the right places. Choose a day from your weekend on which you would be conveniently summarizing your weekly spending.
An Updated List of Your Weekly Spending
Life is unpredictable. And you can never guarantee the availability of income that will flow in every week. Therefore, tracking your expenses is essential and should not be regarded as a one-time task. One has to be consistent in making sure the money is spent in all the right places. Choose a day from your weekend on which you would be conveniently summarizing your weekly spending.
One of the best ways to budget is to have the zero-sum budget approach. Mention all your significant expenses and small ones too. Dedicate every amount of money to the most priority level expenses, from most to least important ones. Note where every dollar of your salary is going. In this way, you will be able to spend your money meaningfully.
Split Your Debt Payments Into Segments
Do not treat your debts as an annual crisis phase. Try paying your debt in segments instead of doing it in one go, or else you would not be left with any money by the end of the month.
Research Well on Different Debt Approaches
Methods such as the Debt Avalanche Method and Debt Snowball Method can help bring significant change in budgeting. Go with whatever approach suits you the best.
Delete Card Information from Online Stores
Impulsive buying is one reason you keep on adding to the insurmountable debt. While shopping online, especially in the days of lockdown, people tend to buy most of the things they don’t even need at that moment. Delete the saved passwords for all of your favorite online shopping websites. You will be amazed how much you were buying things you didn’t even need at all.
In order to save more money to get rid of debts as quickly as possible, do some extra work side by side that doesn’t exhaust you. Work as a freelance writer or get paid for a photography project.
Pick a skill you are good at and make it your profession. It would allow you to make more money.
Know Your Purpose Behind Spending
On each expense, question yourself: Is this what I really need right now? Or is it just another unnecessary wave of overspending? Knowing the difference between what you want versus what you need makes your budgeting efficient and easy to follow.
Overspending, excessive use of credit cards, and procrastinating on tracking your expenses can lead to permanent financial panic mode. Not being proactive in managing your expenses, you will soon fall into a grave pit of financial anxiety and even depression. In order to avoid such miserable conditions, one needs to make sure they know where they are spending and why. In short, being content is the key to savings and ultimately getting out of debt.
Photo by Nataliya Vaitkevich