.png)
Listen, We all make mistakes!
- Ashley
- Jan 5, 2017
- 10 min read
“You can’t get out of debt while keeping the same lifestyle that got you there. Cut out everything except the basics.” – Dave Ramsey
There are several mistakes the average human makes when either creating a budget, paying off debt or establishing a sense of credit. It’s okay, well all make mistakes that is how we learn. I think it is safe to say that we all could use a greater control over spending, especially after the holidays. Am I right? So lets start by understanding the facts and recognizing our mistakes.
Which Mistakes Are Holding Us Back?
Okay, there is a lot of information to cover here so just stay with me and follow along. Trust me, you’ll be thankful you did. Here are a few of the mistakes that we make that are holding us back from being normal in the finance world:
Mistake #1:
We aren’t creating an accurate monthly budget! Budgeting is crucial when you are wanting to pay off debt or even regain control of your finances. It’s a tedious and daunting task, we work so hard for our money and sometimes we want to enjoy it. Wake up! You along with the rest of the responsible world have entered “adulthood”, it sucks and if you want to survive you have to create a realistic and accurate budget.
Establish and Cut costs
To create a realistic budget, first start by figuring out what you’re spending. At this point you should be weighing out what you should be spending and/or what you want to spend; this will include negotiating your needs versus your wants. This process isn’t just about jotting down what you’re spending each month although a good starting point. The idea of a budget is to tackle creating a budget and establish a savings.
Eliminate frivolous spending
Make coffee and lunch at home instead of stopping before work
Shop for just your necessities and not your cravings. Make a list before going to the store (I usually do this on my phone because I always forget it). Clip coupons or use the stores digital coupons if available, shop sales, price match and if affordable shop in bulk.
Utilize the crock-pot! When you work late you don’t want to come home and slave over the stove, try starting dinner before you leave for work. There are so many great ideas for cooking in a crock-pot. Not only will this save time and energy, it will help reduce the need to buy “fast” food or unnecessary groceries – in turn saving you money (good for the budget!).
Cut back! What I mean by this is, eliminate your lifestyle expenses. In order to be successful you will need stick to “needs vs. wants”. This means: Stop eating out, go on more dates (free food, lol!), limit the amount you spend on gifts or make the gift yourself using things in the home, carpool if you have too…
Itemize your obligations
Write our all of your expenses i.e. mortgage, utilities, food, gas, insurance, loans, credit cards, etc. I like to list my expenses in order of importance but to each their own, I also highly recommend when creating your budget that you create a budget as well as setting bi-weekly payments – this will allow you to reduce the amount of interest you are paying and will get you ahead of the game later on down the line. Here is a sample of what your budget might (or should) look like. (note: in a previous post I had mentioned when balancing my account I round my bills to the nearest dollar. This will help with having leftovers.)
The reason we create savings is to prepare ourselves to expect the unexpected, this way if we run into a situation where we have to cover for something outside of the budget we will be able to do so. Stay with me, I have useful information for some of those “unexpected” expenses which I will cover in a few.
Get in, Get out!
Not only is it wise in my opinion to round-up when balancing but start out by transferring half of your leftovers into savings and keeping the other half in checking, just in case you find yourself forgetting about something out there in the pending world. It happens! Get in the habit of forgetting about the savings you have all together, you don’t want to have to rely on that money because it would defeat the purpose of saving. Remember what Ramsey said? “You can’t get out of debt while keeping the same lifestyle that got you there. Cut out everything except the basics.” It is possible to mentally train yourself to forget as long as you have visual prompts like a ledger or book. Get out of the habit of checking your balance online, the only good that can come from the online banking is being able to reconcile the account and see what has or has not cleared. You’re more likely to succeed by keeping track yourself, they have apps for this as well. Train yourself to visually see what you have noted is in your account, not what the bank says. This will benefit you because you will know what you have in the account and not what you have created, if that makes sense. If it doesn’t let me put it to you this way, if I reconciled my ledger and see that the balance in my account is $427 but I noticed my online account says I have $672; reason for this is because as I rounded everything, I created what I call a cushion. This is what protects me from over drafting if I have forgotten to include an expense that cleared my account, in turn I didn’t even have to touch the money I have already been saving. Still with me?
Mistake #2:
Not paying our credit cards correctly. Paying the minimum payment on your credit card is not a problem. There are two different strategies that people associate when paying debt, those are the debt-snowball method and the debt-avalanche method. The snowball method consists of paying off accounts starting with the smallest balances first meanwhile paying the minimum payment on other larger debts, whereas the avalanche method is reversed and consists of paying accounts with the highest interest rate first. You can use either method but I recommend using the, its my money my budget my call method. You are the only one that can determine if you can pay more towards a debt or not, if you are in the position to do so, then GREAT! I recommend paying your small balances first, getting them out-of-the-way. Once a debt is paid off use that budgeted amount and apply it to the next target, this will help you pay off your debt even faster. You want to try to pay more towards your debts because you want to pay as little interest as possible, but realistically we are all relatively stretched thin. Do what you can but remember to keep moving on to the next debt until all are paid off. If you accomplish this goal I recommend cutting all but one card, this will reduce access to returning to this point later on in life. Keep in mind, however, creditors can close an account at anytime if the credit is not being used. Try setting up a bill to be debited monthly from the card, once you get the statement pay that sucker off completely. This will ensure that your account stays open and will reflect positively on your credit.
For a better understanding of the snowball method, check out this great post by Dave Ramsey.
Adding to existing debt! I understand this completely. Before I met the love of my life, I was a single mom and I lived off of my credit cards and not to mention paycheck to paycheck. Even during my relationship we hit a couple of speed bumps and we had to rely on whatever we could to provide for our household. It is a fact of life, but if you can break yourself from that, then you can master this goal blindfolded.
Our goal is to get out of debt, not further in! Don’t get in the habit of spending on your cards, they are there for emergency purposes only. I have to admit I couldn’t finish writing that with a straight face, I called bullshit on myself halfway in. Honestly though, they really should only be there for emergencies. Credit cards are evil, evil, evil. It’s so easy to want something and be able to swipe a card and walk out with a fabulous brand new pair of shoes, but this is where we have to put on our big girl pants and be responsible…. and strong!
Mistake #4
Ignoring our debt. We all know that if we drop a dirty shirt in the hamper and leave it, it will still be there tomorrow. Debt is no different! I know that debt, credit and responsibilities aren’t a priority for all of us but we must realize that what accrues now will just haunt us later. I was a late developer, I didn’t care about paying my bills on time… hell… I didn’t care about paying them at all; I had a better time bouncing checks, skipping the bill and living the fast life that when it actually came time for me to grow up I came face to face with the mountain of crap I had accumulated for myself. It wasn’t fun, especially when I needed to buy a car, a house and utilities in my name. You really don’t realize or even understand until you are in a position like that, but if we can teach out kids now maybe they won’t repeat our mistakes. Point is, don’t just forget about debts, pay them when they are do if not before. Credit is important and unfortunately there is too much in this world that revolves around our credit. Protect it people. Best thing you can do for yourself is to handle it now and get it out-of-the-way, Simple as can be!
Mistake #5
Losing Motivation, getting lazy. Just like a New Years Resolution, we start out strong and eventually just give in or give up. Nothing good ever comes from doing this. Ever! Write a note on your mirror, leave a hint in your car or even find a budget buddy to keep you motivated. If you have hopes of buying a new car or house, clip a picture and stick it on your mirror or visor so that you can remind yourself of where you are trying to go and what you are trying to do. It is possible to make the process bearable and fun, create a chart for your debts; enjoy ripping that sucker off the board when it’s paid and feel the relief as you come closer to your goals and dreams. However you wish to follow through, just do. Remember the trap you created in the first place and remind yourself that you won’t break free unless you accomplish your goal.
Do something productive with your downtime
The power of technology is highly underestimated and we don’t realize the kinds of opportunities out there that we are missing out on. If you have extra time on your hands then do something to benefit and reward you in those times. I have a few tricks that might help you in one way or another, there are paid opportunities and there are rewards – either way the opportunities are going to come in handy for you. Here are a few apps you might want to try out (You’re welcome!):
ShopKick: This is a shopping app that rewards consumers, brands & retailers. Earn free gift cards while shopping, scanning and checking in to your favorite stores. I actually have to thank my mother in law for reminding me of this one because it had been about 6 months or more since I used the app but this is a great app that rewards you with points in which you redeem for gift cards. This did great for me and my Starbucks addiction, helped the wallet too lol.
Ebates: Find coupons and earn cash back at over 2000 stores when you shop. Save with online rebates, deals, promo codes and discounts. You’re probably tired of my Ebates rants but this site is seriously amazing, I get cash back on things I buy all the time just for connecting through this site. If you try it I guarantee you won’t be disappointed. Just think of it as rewards on top of rewards!
InboxDollars: A reward site that pays, literally! Get paid cash for responding to email adverts, surveys, games and other features. I’ve used this site for over 2 years now, it requires a little more work than others but it does what it says. When I have a lot of downtime I utilize this site and do surveys, play games and participate in offers. Just another way to make a few bucks. MySurvey & Mypoints are also great survey sites.
ibotta: A free cash back app that enables users with its smart phone app to earn cash back on in-store and mobile purchases with receipt and/or purchase verification. I also have used this in the past, thanks to my mother in law for reminding me about the shop-kick app, I’ll start using this one again as well (I got lazy, don’t judge).
Viggle: An app for smartphones that allows users to earn rewards for watching television. Check in and earn points. Although I don’t watch TV I know plenty who do and I’ve used this in the past so I know it’s a good app to use if you are able to enjoy the luxury of Television.
Foap: Allows users upload their photos to the startup’s marketplace where they can be purchased for $10 each. Every sale is split 50/50 between the photographer and Foap. So instead of taking decent pictures for free, you can potentially get paid for them.
Drive with UBER: Earn money driving your car on your schedule and be your own boss. With so many riders in every city, there’s opportunity at every turn earning money has never been so easy.
Paribus: Stores change their prices all the time. Paribus gets you money when prices drop. So if you buy something and it goes on sale later, Paribus works in the background to monitor for opportunities to get money back. Whenever you’re eligible, Paribus files price adjustment claims on your behalf.
Until Next time ‘mrica…
There are a few leads for you, let me know how they work for you! You can always check back as I am always looking into new opportunities that will benefit us all. I’m not in it for myself, I want to help others who struggle just as much as I do. Maybe this is my calling, who knows, but if it’s helping even just one person then I’ve been successful in my job. Happy New Year all!
Komentarze