Take Control of Your Finances (Part 2)
By Shannon M. Medisky
Last week, I shared the first 4 steps to taking control of your finances. This week my article continues with 2 more steps:
5. Take stock and move money around. Target the expenses you can have an immediate effect on. These likely include the monthly grocery bill, eating out, and – believe it or not – your tax withholding. Save money on the grocery bill by opting for less expensive generic brands over national brands and/or shop warehouse or no-frills grocery stores to bank even bigger savings. Don’t want to stop eating out? Don’t, but lessen the blow to your bank account by opting for takeout in the form of side orders of sauces and dressings. You’ll save money by not having to pay for a tip and by creating a portion of the meal yourself at home, yet you’ll be able to enjoy the flavors of your favorite restaurants at the same time – only at a fraction of the cost. Save even more money by limiting trips out and about. You’ll save money on gas and wear-and-tear on the car and you’ll make a positive impact on the environment all at the same time. If you’re not out of the house, your checkbook (and your credit card and your cash, for that matter) are all safe from extra spending, too. Take the savings you’re able to finagle from these fluctuating expenses and add it back into your monthly budget to alleviate (or minimize) your shortfall.
A look at your paystub may reveal that Mr. Sam has seemed to have taken more than his fair share! Well, truth be told, he very well could have. Don’t allow the government to earn interest off your hard earned money. Visit www.irs.gov and use the free withholding calculator to determine if you’re having too much money withheld each month from your paycheck. A few minutes online and a simple adjustment to your W2 could put more money in your paycheck (and subsequently your monthly budget) each month.
If you’re like the vast majority of Americans, you likely have credit card debt. It is what it is, and you likely can’t pay it all off at one time. But wouldn’t it be great to start paying off your debt without adding additional costs to your monthly budget? You can. The key is to target your interest rate. Every month that you carry a balance, you accrue additional costs. If you feel like you’re getting nowhere, you’re probably right. Pay only the minimum amount due, and you’re not paying down any of the debt merely the interests costs. If you’ve been paying your bills on time, take matters into your own hands and call your creditor to ask for a lower interest rate. The worst that can happen is they decline your request and you’re in no worse shape than before. The upside is you could dramatically lower your interest rate and your monthly minimum payment. The key is to continue paying your previous minimum payment so that you’ll automatically begin paying down your debt without feeling any impact to your monthly budget.
6. Adjust spending habits accordingly. If, after completing steps #1 through #5, you still find yourself in a monthly budgetary hole, fear not, there are still things you can do to help dig yourself out. These “things” fall into two categories. Things others can do to help you and things you can do to help yourself.
While others aren’t simply going to give you money, many companies can do the next best thing. Call and ask for discounts. Make sure you’re taking advantage of every possible discount available to you. Many companies, for example, reward customers for extra business. Insurance companies give discounts if you carry multiple policies with them. Find out if you can bundle various services with your phone or cable company to reap a bigger savings. Is your winter electric bill eating you alive? Call to ask about a budget payment that averages out your monthly usage so that you’re not paying pennies one month and hundreds the next.
Once you’ve rightfully exploited what others can do to help you stretch your dollars, it’s time to apply a bit of self-help to the situation and adjust your own spending habits. The key is to avoid a major lifestyle overhaul because such a drastic step is likely setting yourself up for misery and failure anyway. Instead, have an honest heart-to-heart with yourself. It might very well be that you’re unable to afford certain things right now, but that does not mean you’re giving them up forever. Ease the pain of putting something off for the moment by establishing a plan to afford it in the future.
Ignorance is most definitely not always bliss, especially when it comes to your money. Start taking control of your finances and stop letting them control you. You worked hard for the money you earned, it’s time you stop feeling like you hardly have any. Stop working harder and start spending (and allocating) your money smarter.
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