Keeping your Head above Water, feet out of Debt

| July 24, 2013 | 0 Comments

Debt Relief

Whether you’re in college, working steadily, or on vacation in the Bahamas, staying on top of your personal financial situation is an underrated part of life that can quickly change things for the worst if a person neglects it. You’ve probably heard it countless times before – that is, to stay out of debt, but it isn’t as easy as one may think. Here are some of the easiest ways to keep the guillotine of debt from chopping off your financial head.

Dealing with Credit Cards

Credit is necessary, whether we like it or not. Buying a house, car, or other large purchases without credit are next to impossible unless you’ve got a boatload of cash and have been saving for years. Credit is best monitored with great scrutiny. Only use your credit card during emergency situations (emergency as in you get a flat tire, have to fly across the country for a death in the family, those types of emergencies), for large purchases as was aforementioned, or simply to build up credit. Building up credit is crucial to qualify you for more significant purchases in the future. To do this, make 5 or less purchases per month and regularly pay off that debt per month. For example if I buy $150 worth of goods per month, pay that entirely off in no more than 3 months ($50/month isn’t a wallet breaker).

Limit Extra Monthly Services

Do you enjoy Netflix? Cable television? How about Hulu+? Xbox Live? NFL Sunday Ticket? Premium music services? Everyone loves these and other similar services – each is innovative, user-friendly, and helps ease a person into relaxation after a tough day at work. But they can also be a hindrance on the old checkbook. Here is a simplified way to deal with the problem: spend less than $30/month. This doesn’t count rent, water/sewage, electricity or other utilities – those are necessary to live. Extra monthly services are your monthly entertainment. You can stretch $30 a pretty long way and in a multitude of packages (example: Netflix, Xbox Live, Pandora One, rent 5 Redbox movies for $21.25).

Going out to Eat

Clearly cooking your own food is cheaper than going out, for obvious reasons: when going out you sit there and tell people to fetch you consumables to shove in your face as you watch sports and yell at the television. In a more serious sense, going out to eat is a great experience: you can eat all sorts of different foods you probably can’t cook at home, you don’t have to put in the work to cook, and you can sit back and relax with friends. Limit going out to dinner once per week ($20) and going out to lunch twice per week ($12 or less). Lunch is far less expensive than dinner and grabbing Subway a couple times per week is relatively inexpensive and healthier for you than eating a greasy burger. $32 isn’t super pricey, but when you multiply that by 4 weeks per month it becomes a bigger financial burden.

Saving Money

The system of capitalism is not about seeking by on a check-to-check basis. It is about constantly building and growing. You can spend all your money on consumables such as television, video games, going out, new toys, vehicles, and everything else that is sold in stores, but where does that get you? These are all temporary products. Either they have a one-time use (food), get old after a couple uses (movies, games) or they serve the same function as something you already own (new car). While sometimes it’ll be absolutely necessary to purchase another vehicle, you get where I’m coming from. Saving and investing is the greatest long-term method to growing from a financial situation. To answer the question, how much should I save per month, this isn’t really a question with a definite answer. You should save all the money you don’t need for monthly purchases. This is not only useful to deal with in emergency situations (conceiving a child unexpectedly, health/medical problems, vehicle repairs, etc.), but also to save money for investing such as in higher education, stocks, bonds, and high interest accounts. While saving money is not appealing to the short term, long term thinkers are the ones eventually smiling.

Figuring out your personal finances is actually quite enjoyable. You can plan for now, plan for the future, and better gauge your current financial situation. All of these will vary from person to person and the types of expenses that person has per month (do you have a mortgage payment to make? Owe child support? Owe back taxes to the IRS?) But by following this framework you should be easily able to keep your head above water and feet out of the sinking sands of debt.

Dave Symmonds is a writer for Tax Relief Center, which specializes in helping tax payers find a tax attorney and other services to help them pay off tax debt.

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Category: Debt

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