I am at the stage of my life where I am seeking financial freedom. When I was in high school and college; I did not learn finances or budgeting at all. At home I was told work and pay the bills. My father had my brother and I go through a financial coursebook at the end of our high school years, but that did not reflect the reality of the complexity of finances.
Now that I am looking at repaying my debts, I have found out that the interest rate on one of my loans is sky high and I went from a little over a grand total to $32,000. What happened! I had gone to school during this time, but in the almost two years that I ignored it, here I am. I will give you an update on how I will manage this, as there are many options.
I will not be covering “clever” ways to earn money. Instead I will be covering practical tips and tricks I have learned over the years and more recently to manage my finances.
Tip 1:
Have a job. Sounds simple, right? But I really mean it. Don’t think that working a minimum wage job is going to get you by on paying your bills. Unless you have a good paying job; you may have to have more than one job. Having more than one job can help make ends meet when you have to pay your basic bills: rent, utility, phone, insurance, subscriptions, groceries. Add on student loans and other expenses that can be unforeseen. Pretty soon, no matter how frugal you are, it becomes difficult to make ends meet.
I currently have two jobs. One pays well and the other is minimum wage and the hours fluctuate each week.
Tip 2:
Have a goal. Make your goal long term. You can have other goals, but have a primary goal and focus on that first. Also have an order on how to achieve your goals.
Currently my goals are to pay my debt off as fast as possible, buy a new vehicle and rent a place. This seems like a monumental, nearly impossible feat, but that is where having more than one job comes in.
My first order is to pay off some of my debts. You may have heard of the snowball method of paying off debts, where you focus on smaller debts to pay off first and then do the bigger ones. Keep in mind that all of your debts have an interest rate. If you ignore one of them in favor of paying off your smaller debts first, you could still be hurting your credit score and end up paying more. Instead I like to focus primarily on one debt and then pay the minimum on the others until I can afford to pay the rest.
Once I have increased my credit score from paying off some of my debts, I can buy a new vehicle. You may be thinking, “She shouldn’t be buying a vehicle right now when she has one!” True. My car has serviced me will for almost a decade. And now at nearly 20 years old, it is having more problems that I am unwilling to invest in fixing. I am not looking for a brand new vehicle, just a slightly hail dinged newer model SUV. Increasing my credit score will help me purchase a new vehicle without needing a co-signer and it will lower my interest rate on the vehicle, saving me money.
Finally, increasing my credit score will help me qualify for renting a house/apartment. Usually renters are looking for someone with at least a 600 credit score and their income is 3x greater than the rent. So, you are looking to rent an apartment that is $1,200 a month, each month you should earn at least $3,600.
Tip 3:
Cancel auto-pay. If you are really on a shoe-string budget, it can become difficult to keep track of all of your bills. Not all companies that offer auto-pay will inform you prior to when they are making the withdrawal and/or they will be inconsistent of the amount each time. Auto-pay or even a delayed cashing of a check has caused my account to bounce more than once. As a result, I have lost around $35 in fees for a transaction that did not have enough funds to cover the bill (even though it was in my savings).
Cancel subscriptions. Unless you are using the subscription for things that are important, i.e. cloud storage, maybe one entertainment, cancel them. That little amount adds up over the year(s) and when you realize that you could have put it towards something else, like paying off debts, it will have already been wasted.
Tip 4:
Think before you buy. Even if something is on sale, don’t just grab it and go. Many people return items all the time because they were impulsive and bought something. Clothes not tried on in store, only to return it because it was the wrong size or didn’t fit right, resulting in buying more. The toy or high ticket tech device that wasn’t what quite what they wanted, be it color or model.
Instead plan your trips, how much and what are you willing to spend. I personally disregard unhealthy items that we don’t really need or have use of when I shop. Pop? No. Chips? No. Egg rolls? No. I try to plan the foods that I know I will eat and try to make food that most people can eat throughout the week.
Tip 5:
Get a budgeting book. Keep it simple. If you get an app to budget, they can be free, but if you link it to your bank account, they will charge you for it. I like writing things down to keep it in perspective and plan how I want to pay it off.
Tip 6:
Don’t be hard on yourself. You learn as you go and doing finances from the ground up is not just about being clever and beating the system. It is being disciplined, setting limits and branching out to try more and different things to achieve your goals (legally).
The Black Cherry Azalea 