Debt can be a scary thing, and the more you get into it, the more of a quicksand feeling can be attached to it and can be hard to get out. Depending on the balance, it can take years to go out, but once you do, it’s important to stay out and hopefully learn from your previous money mistakes. Going forward you can take on a few money moves to ensure that you never fall down that same old debt path again.
Really the only way to ensure that you have more money coming in instead of going out is to reduce expenses to free up extra money. A great way to taking a look at what you’re spending is to take last month’s credit or debit card statement and looking at every purchase outside of necessary monthly bills. Add up the charges that could have been avoided and it could be shocking. One place that you could look to save a significant amount of money would be to reduce going out to eat and opting to buy groceries at the grocery store instead.
Create an Emergency Fund
As you start to limit purchases to free up extra money to pay off debt and save for the future, what would you do if a huge unexpected purchase came up, how would you pay for it? Unfortunately, if your car needs a repair, or even worse, if you lose your job and it takes a few months to find a new one, you would probably have put on a credit card and go into debt. A great way to avoid that and have a cushion just in case would be a to create an emergency fund of a few months’ worth of expenses to have on hand if needed.
Use a Credit Card for All Purchases
It may sound bad to use a credit card for all purchases, but actually if you have a credit card with rewards points or dollars (if not, get one!), you can earn rewards and the normal purchases that you would make in a month anyways, so why not use a credit card, and you get to pay the following month. Just be careful not to start charging more than what you need just to accumulate rewards. They will start to add up quickly, so a year worth of charging and you could be in redeeming plenty of points for gift cards or getting a check back for rewards dollars.
Budget to Tighten Up Finances
To take purchases to the next level and tighten up a little more would be to start to budget. This way at least when you spend that allocated amount, it’s done until next paycheck, and hopefully you avoid going over your limit. The goal would be to not only have more money coming in, versus going out, staying out of debt, and saving for the future as soon and as much as you can so you have a considerable amount to live off during retirement.