Yesterday I read a twitter from a young woman lamenting that she was still a teen and in debt and this got me thinking about debt and the current state of the economy. Everyone is crying about debt, upset at how things have turned out and yet it is clear that many people (not all) have made a lot of bad choices.
A few years ago SOMEONE asked me how I manage on such a small income (at the time she and I made the same and she still lived at home while I had been out of the house since I was 19). I told her that if she followed my practices not only could she pull herself out of debt but that she could be buying a house not long after. If she and I had the same going in but she had less NEEDed finances then she would have no trouble saving. She was interested and I started with the rules.
- get rid of all your credit cards (always have one for emergencies but NEVER use it)
- only spend what you have, if you don’t have the money you can’t spend
- write down everything you purchase, everything.
- remove your monthly expenses ahead of anything else, rent, phone, student loans, other debts already made. You only get to spend the left overs.
She then asked me about shopping, and clothes and when I explained how being careful with your washing means you don’t need to buy new clothes every season she just started shaking her head. She couldn’t follow my rules, couldn’t live without shopping or credit cards.
Three years later, everyone including SOMEONE is singing a different tune. It’s no longer about who your wearing or what your driving, it’s about paying your bills. Now the push is to spend less, be green and to be less extravagant. My way of thinking is much more accepted. Retail Therapy is now a dirty word. People are finally realizing they don’t need the latest dohicky. Of course we still spend, and people aren’t living as monks but has improved tons.
I admit it, I have debts, but all of my debts work for me. My car was financed, my interest rate is lower then the rate of inflation, so I have paid less for the car over the years then I would have if I bought it out right. My student loans give me good credit and help me out at the end of the year with taxes as all the interest I do pay is a write off. My wedding costs were low in comparison and put on a line of credit, paid most of it off and the interest is very low and being paid off monthly. Debt isn’t evil, it helps give you credit and helps you in the future, getting buried under it is evil. When you’re spending you need to think “Is this NEEDed? And will I regret it next year while I’m still paying it off?”
Tips:
- don’t buy lunch, brown bag it
the food will be better and healthier also - don’t drop 100 bucks at the club on drinks
drinks at a club and bar are way over priced, if you must drink, prime at home before you get to the club - movies are fun but costly, only see movies that seeing them in the theatre makes a difference
skip the drinks and popcorn too, look for daytime showings or half price nights - coupons, coupons, coupons
don’t feel embarrassed, feel empowered when you whip those bad boys out at the cash register - AAA
got a AAA or CAA card? You’ll be amazed how many places give you a discount with that. I use mind for 10 percent off dinner all the time - REBATES!
most electronics have mail in rebates, that’s free money, don’t forget to submit those - bring back your cans
you paid the deposit, why not get that money back? Do you like throwing nickels in the trash? - Walk instead of driving
short trips and walking distance, why not walk? - brew your own coffee
why spend 3 bucks for a five minutes of coffee - second hand stores are your friend
- bring your old games in for cash
- buy used games & movies
- buy in bulk
group up with your friends, a family of three doesn’t need 18 chicken breasts, but you can split up those big packages among families. - save your MPG
- cancel satellite radio and start downloading podcasts
half the shows on satellite are available for download anyways, why pay for it
Do you have more tips? make them known in the comments section of this post.