Finding extra money in the budget could help you take a positive step towards debt relief. Better yet, you could invest some money or work towards building an emergency fund. So where can you find savings to help pay off too much debt? Here are 5 tips to help you!
Tips to Get Out of Too Much Debt
Savings does not always have to come in large chunks. Here are some tips to help you learn how to save money on day-to-day and monthly expenses.
First, get into a savings mindset! Look at saving in a positive framework rather than something that restricts you from doing things you like. Just like you have an expense item on your budget for entertainment, leave aside as little or as much money for saving. You will be surprised to see how much you can do with a smaller start. Making saving a priority and a goal gives it credibility. You can also see progress and feel good about your saving efforts.
Stick to a Strategy
Budgeting is a discipline. Therefore, follow a methodical system to create your budget rather than making something up as you go along. When budgeting you want to look at your Net income and not your gross income. Many make the mistake of budgeting from their gross income. Net income is what you actually bring home AFTER taxes. The 50/30/20 rule gives an accurate direction into implementing your budget. No more than 50% of net income should be spent on needs; no more than 30% on wants; save a minimum of 20%. This system can help you get out of debt.
Don’t Ignore Smaller Daily Savings
Ignoring the obvious is a key source of consumer debt. Small things such as coupons & discount codes are often forgotten. However, the money you save on shipping, or the 5% discount on the total purchase puts money back into your pocket. Therefore, keep track of these regularly to maximize your saving. In addition, DIY, organized shopping trips, less eating out, bringing your own coffee, unplugging unused devices and switching off that unnecessary lights help build everyday savings leading to less consumer debt in the future.
Commit to Save and Invest
In addition to the accumulation of these daily, unintentional savings, make sure you have a commitment to save! One way to do this is to set aside a percentage of your income in a separate high yield savings account to save for the future. Try using direct deposit to send money to these accounts every month or even quarter. Online banking facilities provide the option of setting several if not unlimited savings goals. This method can help you keep track of them. Maximizing these services can help you keep up with your savings.
Think Long Term
Saving over the long term helps prepare you for an unexpected event or an emergency. Some of the things you can do towards long term savings include:
- Refinancing your mortgage.
- Making sure your credit is in good standing.
- Keeping continuous track of your spending.
- Save for any predictable future expenses such as kid’s college education.
The important thing to note is that it requires planning and discipline.
Getting rid of too much debt secures your financial future, in the short, medium and long term. If you are hoping to find out how to become debt free, looking for savings is the first place to begin.
If you are looking to eliminate credit card debt, speak with a certified credit counselor at American Consumer Credit Counseling today! Call 800-769-3571.