6 tips to save money and reduce debt
Looking to manage your money a little more efficiently this year? Here are 6 tips for reducing and managing debt:
1) Use Cash: Aside from convenience, one of the main reasons people prefer credit cards is they don’t actually feel themselves using money. When you use cash, you can literally feel the money leaving your hands. This will likely cause you to spend a few extra seconds thinking about whether that new pair of jeans is something you actually need.
2) Avoid Impulse Expenses: Before going shopping, make a list of everything you need and stick to it. Stores are stocked with temptations, but you need to rise above. If possible, stick to stores or aisles that have only what you need. Impulse expenses can mess up your budget.
3) Bill Yourself: You should aim to save about 20% of your income. To help yourself get there, bill yourself $100 (or whatever you can afford) each month. This money should go toward a “rainy day” fund, which should only be accessed in an emergency situation. This will make you more prepared for a catastrophic situation and reduce the amount of money you can waste on things you don’t really need.
4) Budget Everything: Sit down with your partner and create a monthly budget. Make sure you factor in all of your anticipated expenses, from groceries and gas, to your mortgage payment and energy bill. Each day, subtract your expenses from each respective budget. For example, if you spend $18 at the grocery store, deduct that from your groceries allowance.
5) Prioritize Payments: If you’re in debt and can’t afford to make all of your monthly payments, you should focus on paying down your secured credit-card debt obligations. These include your energy bills, auto loans, student loans and taxes. You shouldn’t neglect your unsecured credit-card debt, but it should take a back seat for now.
6) Get Help: Finances can be confusing, and sometimes it’s hard to view your situation through an objective lens. To ensure you’re making the right financial decisions, seek the counsel of a financial advisor. Your advisor will analyze your income, expenses and savings and help you make informed decisions relating to your financial future.