Simple Tips To Help You Stay Debt Free
It might be easier than you think to stay out of debt, even with the Coronavirus crisis. If you want to survive the year in decent financial shape, here are some tips that you need to put into action immediately.
One: Get A Budget
Ideally, you would already have a budget but, if you are like most Americans, you don’t. Without a budget, you are negotiating your financial world without a map.
A budget does not have to be fancy. Simply write out your bills and include allotments for things like food, entertainment and even casual spending. You need to account for every dollar that you bring in.
You also need to have at least 10 percent of your take home pay going to savings. 20 percent would be better, but if you are not saving right now, start at 10 and work your way up from there over time. That means that if you take home 5000 dollars a month, put 500 bucks into savings.
If you do not have room to save that much, you need to make some changes in your budget. This could be as simple as skipping one day at the movies or it could mean some hard decisions like getting a cheaper car or moving to a cheaper home.
This might sound extreme, but you can not survive long term without a savings account and a balanced budget. In addition, that money going to savings gives you a monthly cushion that assures that you are not living paycheck to paycheck. If you are a little short one month, you can simply cut back on saving temporarily.
Two: Open An Emergency Savings Account
Now that you have money to put towards savings, get that money into an emergency savings account.
The easiest way to do that would be to simply open up an account at your current bank but there is a better way. You need to open an online savings.
The benefit to the online savings is that it is easy to get to but you do not have immediate access. It takes about one business day to transfer money from an online account. That gives you time to think about the transfer and make sure that you are really spending the money on an emergency.
Online savings also traditionally pay much more than local banks. Often more than 10 times the interest.
Three: Take Care Of Your Cards
In stressful situations it is easy to let credit card debt get out of control. The ability to spend and not see the consequences for 30 days is a dangerous thing. It can lead to impulse spending.
The best thing that you can do with your credit cards is forget that you have them. Keep them in a safe place for emergencies but do not carry them around with you. Also, be sure to erase the numbers on websites where you have stored payment methods.
Keeping your credit card usage under control can help keep you from becoming like the average American who carries well over 5000 dollars in credit card debt.
Four: Pick Up Extra Income
Even in a down economy, there may be ways to bring in some extra income and you should take advantage of all of them.
You could spend your couch time doing online surveys, drive some people around with Uber or maybe pick up a weekend shift at the grocery store.
The point is that you need to maximize your free time. Unless you are currently working 80 hours a week, you probably have some extra time. This free time is time that you can and should put to good use.
Five: Pay Off Your Debt
You never know when you might be impacted. The economy that we have right now is giving nobody a security blanket to hold on to. Pay off that debt now while you have a good income. Then, if the worst were to happen, your expenses would be much more manageable.
The biggest debt offender is credit card debt. With the average interest rate being over 17 percent, this debt can really kill a budget. Work on paying that debt down or consider a personal loan to consolidate your debt.
To Wrap It All Up
There you have it, five easy ways to stay on top of that debt. Try to put as many of these tips into effect and you can come out of 2020 with stable finances.