As per the reports, the household debt in the US has touched an astronomical USD 14.6 trillion. What makes it more alarming is that this figure is increasing by the day.
If you’re one of those who have debt worth thousands of dollars hanging over your head, you’re in for a treat. In this article today, I’m going to help you get rid of your debt and save money.
How? Well, I’m going to introduce you to tips and tricks to cut down on your expenses and save money. Trust me; it’s the best way to eliminate debt and get your finances in order. In other words, it’s the safest way out.
Alright. Now let’s check out the tips to cut your expenses and increase your wealth:
Be Mindful of Your Spending Habits
One of the first things that you need to do is evaluate your spending habits. Where does your money go every month? It’s easier to know it. All you need to do is calculate how much you’ve spent in the last 30 days and where; and you’ll know where you stand.
It will be a major eye-opener for you as it will help you understand where your finances stand or what consumes the primary chunk of your income. For example, when I evaluated my spendings, I got to know that I was spending way too much at Starbucks.
That’s right, guys. It’s my go-to spot and I nearly go there every day for my morning cup of coffee. The same goes for California pizza. I used to order 4-5 times a week from them. It was then I started cooking at home and trust me; it made a huge difference in my personal finances.
Switch to Cash Payments
I’m the person who uses her credit card everywhere. Whether it’s a cup of coffee or clothes I buy, I prefer paying through a credit card. It’s something that burdened me a lot recently when I lost my job due to the covid-19 pandemic.
I had a huge credit card debt hanging over my head and it was then I got to know that credit cards actually make you spend more money. Hence, I always recommend using cash now.
When paying through cash, you stay a lot more mindful than paying through credit or debit card. I went for a debt consolidation loan at the end of the day to pay my huge credit card bills. I’m never going down that road again. Learned my lesson!
Create a Budget
Another way to get your personal finances in order and save money is to create a budget. When you live your life under a strict budget, you save a lot more money than usual.
It goes without saying that not having a budget makes you splurge on unnecessary things. I mean, do you really need that abstract painting you just bought a while ago? Was it really a need? Such issues will no longer remain a problem if you prepare a budget.
It’s pretty simple. Here’s how you can do it:
- Take out an estimate of your monthly earnings
- Determine the amount that goes to necessities, including apartment rent, electricity bill, etc.
- Create a rundown of your needs and skip the wants
There’s a fine line between needs and wants. Managing your money will become easier once you understand the difference between the two.
Recheck Your Subscriptions
Speaking of cutting your expenses and creating a budget, one of the most important things is to recheck your subscriptions. Most people tend to cut their shopping expenses but forget about the subscriptions that cost you a significant amount every month.
If you have subscriptions for the internet, smart TV, a wellness club, a gym or a pool, or anything for that matter, you need to reevaluate them. How much are you benefiting from them? Are they really worth it?
If not, it’s time you cut them loose. I remember I used to go to the gym once a week and it used to cost me around $600 a month. Thus, I cut it off, and guess what? It made a considerable difference in my monthly savings.
A Savings Account
Last but not least, please get a separate saving’s account if you wish to save your money. Having your savings and monthly budget in the same account can cause you a lot of trouble.
It will provoke you to spend money on unnecessary things and every time you do so, you’ll think to yourself that it’s the last time. It’s a vicious cycle that will continue and your account will be empty before you know it.
In order to avoid such an inconvenient situation, you must have a separate savings account. No matter what happens, DO NOT take out money from that account. Remember that it’s there for a reason, for your rainy days. You never know what life has in store for you; hence, having a financial backup is essential. I hope it helps you out. Have a wonderful day ahead, my friends!