Ah, money. Depending on who you ask, it’s what makes the world go ’round or it’s the root of all evil. Either way, modern life depends on it, whether we like it or not. And if you’re really interested in having it be one of your life changes, you’re probably struggling somewhat. If you had tons of money to run through, you probably wouldn’t be worried about changing things!
For many of us, myself included, the biggest issue is the mountain of debt. For whatever reason we find ourselves in a position where we have just plain too many bills and not enough income. And it can be very disheartening to be dishing out payments, especially when a good portion of those payments consist of interest. I know I’ve been there. I’m still there. And it’ll probably be a while until I get out of it.
Now I won’t pretend to be a financial guru, because I’m far from it, but I’ve read enough financial mumbo jumbo to at least have an idea of what I should do. Between what I’ve read and what I’ve tried, I’ve got some tips that have helped me along the way. It’s slow going, but eventually you can get yourself into a better position.
The first step is making sure all of your bills are paid, and paid on time. It doesn’t help to add late fees to the already-high amounts or mess up your credit by having things sent to collections.
One thing that I have found to work is to make a list of all my regular bills and about when they’re due. I have a spiral notebook with a sheet for each month’s bills. I have columns for the due date, the bill, how much is due, how much I paid, and when I paid it. I start the month with just the bills that are due that month. As I get statements in the mail, I add the due date and amount due to the appropriate columns. When I pay the bills, I fill in the appropriate columns for that, too. I can see at a glance what has been paid and what hasn’t been.
In addition to this, I’ve taken the idea one step further: I’ve come up with a game plan — a bill-paying schedule to make sure everything is getting paid on time. I have it all planned out for the whole year: when each bill is getting paid, based on how much we bring home each week. To do this, I compiled the statements from the past year or so and figured out when bills are usually due, how much they’re usually for, and how often they’re due. Some of this was already done when I made the monthly sheets. But by looking more in-depth at the statements, I was able to finagle things so I could determine when the bills would be paid, based on when they’re due and when we get paid.
These efforts have made it slightly less stressful when payday comes, because I don’t have to think about what I’m paying each week. I know that if I open my notebook and it says we’re paying the electric bill and the phone bill, that’s what we’re paying. And both will be on time. Easy peasy.
In an attempt to save (I say attempt because we haven’t gotten very far with it), I have a little money transferred to a savings account automatically each week. When I balance my checkbooks on payday, I record that transfer as if it were a bill being paid. It’s non-negotiable, because it’s automatic. It’s not much, but it provides a little bit of a cushion if something comes up.
This is about the only attempt to save we have going at the moment, because our expenses have been cut pretty far. But there are lots of little ways to spend less money that can help you save a little more. I’ve written a few articles about saving money, and I will share them in future posts. They may guide you in the right direction so you can get even closer to your goals.
Paying Off Debt
Once the bills are being paid on time, and a little money is getting put aside in savings, it’s time to tackle the debt. And there are a ton of resources out there to help you. Rather than rely on companies or solicitations that claim to help me pay off my debt, I prefer to listen to actual financial experts and keep things in my control. But you have to do what’s right for you. Just be careful — they’re not all legit.
From what I’ve read and heard, it seems to be the general consensus that you should cut back where you can, save about $1000 in an emergency fund while you’re paying just the minimum on the debts, then tackle the debt like crazy once you have that $1000 cushion. Once the debt’s paid off, focus on building up an emergency fund for 3-6 months’ worth of expenses so you don’t get back into that debt.
How you pay off the debt is up to you. Some gurus will say to pay off the smallest debt first. Some will say to pay off the highest interest debt first. Whatever makes you feel most productive is what you should do, as far as I’m concerned. The biggest thing to remember is that once a debt is paid off, you should take the payments that were being made on that debt and apply them to the next debt in your plan.
For those of us living paycheck-to-paycheck, it can be hard to pay any more than necessary, especially when we’ve already cut out pretty much all unnecessary expenses. But even those of us who are already beyond tight can find a little — like the $10 a week that gets transferred into my savings account. And then, of course, there’s always…
Making More Money
Once the expenses are cut as much as reasonably possible, the next step is to try to bring in supplemental income. For me, that came in the form of my writing: I self-published two novels and started selling those, plus I got a little residual income from some articles I wrote online. While neither of these is getting me rich any time soon, they help ease the burden a little. For you, you may be able to bring in a little extra in a variety of different ways:
Perhaps you have a hobby or talent that you can put to use.
Hire yourself out for mowing lawns or some other such thing.
Or, if you have a job outside the home:
See if you can pick up a few extra hours for supplemental income.
Ask for a raise.
See if you’re in line for any promotions.
Look for a higher-paying job in your field.
The possibilities are endless. And just a little extra a week or month can knock down that debt faster than any of your other efforts.
This is by no means an exhaustive list of ideas or ways to get yourself back on track. But once you’ve figured out what it is you have to change and how you’re going to get there, the rest is just staying motivated and not losing focus. And that, of course, will be covered in future posts.