The current state of the economy is forcing families to take a look at their careless spending habits. So how many American's are in debt? Studies suggest that at least 50% of Americans are in Debt and if you include secured debts like homes and cars then it's closer to 80%. With things like auto loans and mortgages aside, most people have credit cards. While a lot of us do a good job of keeping our balances low and paying on time, the average balance is around $900-$1000. Having multiple pieces of plastic only increases the amount of debt one is carrying.
When it comes to managing your personal finances, families are finding it hard to keep their expenses in check. Increasingly Americans are spending much more then they earn. It's frustrating to live paycheck to paycheck and easily understandable how so many fall into debt.
It's time to start living a debt-free lifestyle. While you can't get out of debt overnight, Saving Money at home can be a breeze with these 7 tips! They will certainly help you improve your money management skills & be on your way to living debt-free!
1.) Track your spending!
Keep receipts for ALL transactions including credit & debit cards and cash! If you don't know where your money goes, then you will have a hard time figuring out where you need to change your habits. Keep track of what you spend and then at the end of the month sit down and look through it. Check for patterns and places you're spending more then you need too. Have over $40 in receipts from Starbucks for the month? Consider a high quality coffee maker – in the long run it'll save you more money.
2.) Even a Cave Man Can Do It
Ok, i'm not suggesting you live like a Cave Man but the point still remains. Every day Americans are spending more then they have to by overlooking small changes they can make in their lifestyle. Consider hang drying your clothes on a clothes line. Dryers use a lot of energy and heat resulting in higher bills. Wash your clothing with cold water when you can to avoid heating up the water to wash. Making small changes in your every day life can amount to huge savings in the long run thus eliminating your debt.
3.) Make a list.. and stick to it!
Impulsive spending is one of the leading causes of debt. When you leave the house to shop, take a list and stick to it! When going grocery shopping NEVER leave the house hungry! Create a budget and stay within it whenever possible. If you have to leave your credit cards at home to not use them then do it. Personally I have to avoid areas of the store all together to not impulsively buy – if this works for you do it! Whatever you have to do to decrease your unnecessary spending.
4.) Start saving.. NOW.
The average American saves about $1 for every $100 they earn. Crazy isn't it? Find ways to save more money today – it won't be as easy tomorrow! With everything going on in the economy and with our government, Social Security as it was known yesterday will not be the same later down the road. You must start saving now, and as much as you can. A lot of bank accounts offer free automated transfers monthly which can be useful to help you start a savings account. Most banks offer a free savings account when you open a new checking account. Designating an amount either by paycheck or on a weekly/monthly basis to be transferred to a savings account is a good start. Find an amount you are comfortable with and keep to it.
5.) Do the Math
Making minimum payments on those credit cards will get you nowhere! As a result of the CARD Act of 2009, credit card issuers now must disclose how much money in interest it will cost and how long it will take you to get out of debt only paying the minimum payment. If you only paid the minimum payment every time it would take you 20+ years to pay off a $5000 balance! Whenever possible pay as much of your balance as you can instead of the minimum payment. You will be surprised how fast you get out of debt!
6.) Increase your Score
I can not stress the importance of a higher Credit Score. Having a lower Credit Score will cause lenders to increase their rates resulting in more debt for you. You should be tracking your credit score regularly. Online websites like Credit Sesame allow you to sign up for FREE and let you see your credit score for free monthly. There is no free trials or credit card needed! You should also check your report. Never EVER pay for a Credit Report. Visit AnnualCreditReport.com to get your report from all 3 reporting agencies yearly at NO cost to you.
7.) Make a Sacrifice
If you want to become debt free, you will need to make sacrifices. Why spend unnecessarily? You should Efile your own taxes, eat out less, cook at home (and from scratch), cancel your magazine subscriptions (Read at your local library!), and rent movies (I post about FREE Red box rentals all the time) so that you can save extra money to help pay off your debts. Do you really need to bundle all of those movie channels with your current cable tv subscription? Do you even need cable at all? Did you know you can get free month trials of popular Online TV & Movie Streaming sites like Hulu and Netflix? Plus these companies offer all the great shows and movies you watch for a low monthly price of around $7.. compare that to the $100 you're spending monthly on cable TV!
There is several ways you can go about living a debt free lifestyle, these are only a few tips to get you started. Please feel free to comment below with your tips and ideas on how to get out of debt and live debt free!
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