I know, I know, a budget really? yes really. It does work. Most people today just flip out their debit card or their credit card and buy what every they want. Without thinking about what the financial implications are. If you charge it. It does come due to be paid on your credit card. And if you don’t pay your credit cards off monthly now you are paying high interest on the balance you carry. This alone is 1 of the life lessons.
You rationalize. Oh! but it was on sale. I got a really great price. Maybe you did but, if you pay an interest charge or an overdraft charge with your bank. How much did you really save? And the bigger impact what does over drafting your checking account and carrying high balance on credit cards do to your credit?
Well let me tell you it will tank your credit score. High balances on your credit cards can drop your credit score 50 to more than 100 points. Yes, trust me it can and it will.
There’s this little tool I use weekly. Is called Credit Karma and only Credit Karma. It can and will give you an idea of how your debt effects your credit score on a weekly basis. And guess what it’s free. And it does not hit your credit report as a hard inquiry. It only tracks TransUnion and Equifax but still it’s a great tool to use.
Lesson: CREATE AND STICK TO A BUDGET.
Stop! Impulse buying. Grocery stores, retail stores and online stores are smart they know how to get you to spend your hard-earned money. So, STOP. IMPLUSE BUYING.
Pay your bills on time or before the due date. You are saving yourself interest charges and again a ding or two or three or more on your credit score if you are paying late. This includes utility bills, cell phone bills and yes internet. I know you ask. So, what’s new about this tip. Everybody gives this tip. You are right they do. That’s because it’s true. It’s so simple pay your bills on time. And in today’s world of technology there is absolutely NO reason for your bills to be LATE. NONE.
You can set up a bill pay in your checking account and have it sent out automatically for you. It’s that simple. Or they have invented these little things called apps. I believe that’s what they are called. There these little icons on your cell phone that you go to the AT &T app store, or to the droid app store or to the Microsoft app store. Depending on which smart phone you have and download them. It’s easy. Yep that’s them. Apps your bank has them, there are free ones that really work and help you with a budget. And helps with you paying bills on time.
There’s this little app called Mint.com I make no commissions from this app. But it’s kind of cool. Everything in one place. This thing is though you do have to give them all your account numbers so you can see everything in one place. I have included a link here so you can read and view how to set up the free app and how Mint.com keeps your information safe. Mint also offers to keep your credit score up to date. I do not use that function in Mint. I use Credit Karma it’s also free, I use it because I know it works and it does not ding your credit inquiry. I also make no commissions from Credit Karma either. Lesson: PAY YOUR BILLS ON TIME OR EARLY.
There’s ways to save on that cell phone bill. People will stand in line for hours for the next Apple smart phone. They will pay a thousand dollars for it and not have money for food. Makes no sense to me.
Do you really need an iPhone 10 for a thousand bucks? seriously? and then your cell service costs $150 per month or more. It’s just crazy. That’s $1,800 per year.
The great thing is depending on what type of phone you need. You don’t have to buy an Apple phone. There are android smart phones and the Microsoft smart phone I use. Which to be honest I am not fond of.
If you don’t need a smart phone there are so many providers you should be able to find a service and a type of phone that will work for you. Like Cricket. I also do not get a commission from there either.
And then there’s Smart Talk from Wal-Mart. You can have any type of phone and you purchase the service and data you need monthly. It’s simple.
And get rid of that un-necessary land line. Lesson: GET RID OF THE LAND LINE AND CUT YOUR CELL PHONE BILL DOWN AS MUCH AS IN HALF.
Don’t pay full price for anything. Now I did not say for you to buy cheap junk. Because in that case you get what you pay for.
Wait for items to go on sale. Because they always do. Now sometimes you may not get the color you may want or they sale out of your size. If that’s the case you didn’t need it anyway.
And if you need to purchase a bigger item. Then plan for it. Like I need a new dishwasher average cost $500. I had to make a decision to take it out of my investments or my emergency fund or just do without it for right now.
I chose to do without for right now. I’m single I will never have enough dishes to fill it up in 4 months of using my dishes. So why buy it now? I just wash them by hand after dinner. So, buying a dishwasher is not a priority for right now. I have other things I need to take care of. Did you read “Blog your way out of debt. My first official blog post.”
Cable. Do you really need cable? I know I can not live without internet and Wi-Fi. But I have not had cable or TV for that matter for almost three years. And the only time I have missed it is during football games. But, that’s easily solved. I watch everything else using my computer hooked up to my TV. College football games I get together with family and watch it with them. And as for the NFL I pay for the games I want to watch and watch them online and feed them to my TV screen using Wi-Fi.
Lesson: DO YOU NEED CABLE?
Utility costs: They just keep going up and up every year and you get no additional service or anything for the additional charge. But, it happens. So how do you budget for utilities?
Well this is how I do it. The first year I purchased this house I just had to wait for the bill to come in and pay it. I had no idea what the costs would be. Then once I had about 12 months of bills I added them up add 10 % increase and divided them by 12 and then come up and average monthly amount. This amount I starting paying monthly. It made my budget easier to work. Even though some months I overpaid and had a credit and other months I underpaid but I had the credit.
For example. My total bills for 12 months were $3800 with a $400-year increase made it $4200/12 = $350 per month. So, every month I pay the $350. Then when the bill came in I checked to see if I had paid enough.
But, ways to save money on utilities. Make sure your windows and doors don’t leak air. Your utility company will come and check it for you for FREE.
Change your a/c filters monthly.
Increase your temp up 1 to 2 degrees. It helps. If you keep it at 68 degrees in the summer turn it up to 70 degrees. Here in the south it is horrible with the humidity. So, I use fans in the room I am in. I keep my windows covered with blinds during the heat of the day.
Lesson: AVERAGE YOUR UTILITY COST AND CUT OUT UN-NECESSARY UTILITY COSTS.
Which both are still sold on Amazon. But, in these books are couple of things that people still do to this day. Waste. People are just wasteful.
Did you know the average family of four spends approximately $300 per year on paper towels? That’s right paper towels.
That does not make sense to me. I have a family member that uses a roll of paper towels a day. Yes, a day. Everything is cleaned with a paper towel.
My point is not to depress you but to get you focused on things that you can cut down on. Remember the plan is to get out of debt.
Not only do we need to increase income but we need to cut cost.
Did you know that you can use a microfiber cloth to clean anything glass in the house, on your car windows or boat (only after I have washed the entire car and it has been rinsed I then use the microfiber cloth to clean the windows)? Just dampen them, use them to clean all the glass and then just toss them in the wash with your towels.
I also use them for dusting everything from electronics to my wood furniture.
Then I have a special stack of them of a specific color for my garage. I use the orange ones for the garage.
I love these things. You can buy a pack of 24 for about $12.00. Yep. 12 bucks these are the cheaper ones but they will last two or three years.
If I can keep my family from finding my hiding spot for my paper towels. I then only use 10-14 rolls of paper towels per year. And the reason I use that many is because I have two small Maltese fur babies.
Another thing I did to cut down on paper towels I use very few in a microwave. I use a microwave dish to warm things. The microwave dish cost about $14-$15 and it will last 10 plus years.
Lesson: STOP WASTING PAPERTOWELS: HOW MANY DO YOU REALLY NEED TO USE?