Having a little extra money at the end of the month is always useful but for some people it’s essential to getting by. It’s almost a nightmare for some as, with each month coming to a close, bills come due and you don’t know how you’re going to pay them off. As we’ve seen in recent years, far too many individuals couldn’t pay their bills simply because they took on too much debt. Whether it was credit or loan debt, many people had to file for bankruptcy or lost their home. It hasn’t always been through irresponsible spending but it’s often the case. If you’re not deep in debt then you’re very fortunate but it’s even more important that you stay out of debt. If you’re concerned that you’re taking on too much and you’re worried about putting yourself in a debt hole, here’s five tips that have proven most effective at lowering your debt or staying out of debt completely.
1) Cut Out The Card:
This doesn’t mean that you should take out your credit cards and make confetti out of them, just take them out of your wallet or purse and resist using them unless it’s an emergency situation. If you find that you have a hard time paying off the balance at the end of the month then you shouldn’t be using them. You should use cash or your debit card instead. This way you’ll be avoiding monthly interest rates and you’ll be living within your means. It will force you to be more aware of what you can and can’t spend.
2) Cost of Eating:
Stop eating out for dinner or lunch. Many people opt to do this because of the connivance of it but it translates it to huge costs. Change your eating habits and prepare your meals and plan them out for the week ahead. That five to ten dollars every meal will really add up and hit your account hard. If you don’t believe it, look at your bank statement and just add up all of the times in a week that you eat out and see how much it’s actually setting you back. You’ll be surprised at how much you’re spending.
3) Communications Costs:
Most people live from their cell phone but are carrying a landline out of habit. You cell phone is probably really important to have, especially if you run a business or work remotely with any regularity. Consider cutting out your landline from your monthly budget.
4) Shopping Around:
This could go for almost anything. Shopping around to compare insurance plans, for example, is a really annoying experience and people often stay with a provider or plan simply because they don’t want to deal with the headache of pouring over a lot of paperwork. Shopping around for better rates will save you money, period.
Finally, look at your monthly statement and see where you’re spending money when you don’t really need to. This could be anywhere from shopping for a new dress to buying a CD. Maybe it’s a morning trip to the local coffee shop to get a morning brew. All of these little costs add up to big losses. Cutting out entertainment and hobby costs will help you save a lot.
Much of staying out of debt requires a little self-examination. Looking in a proverbial mirror and seeing how your spending can really help you to understand what you’re doing. Changing your spending habits is the best way to stay out of debt or get control of it. Living within your means is a tough proposition, especially in a market economy that’s driven by buying. Being able to tell the difference between need and want is the first step towards understanding habits take hold and land you in debt. Look at these tips to keep yourself from making the same mistakes.