For once in my life I am NOT living paycheck to paycheck. I know I am only 25, but I have struggled with money from a very young age. At 19 I was in $10,000 credit card debt and had to drop out of college to work and pay it off. Last year I managed to accumulate another $4,000. And to make matters worse, at the end of the year I had to buy a new car as well (and take on the car insurance bill that I was previously not paying). Right now, I am debt free (with the exception of my student loans) AND have no car payment. This was not easy for me and I still struggle with it every day, so I thought I would share some of my tips. I would love to hear some of the tips you all have for being a savvy saver and careful spender!
Cease the credit: I did not close the accounts, but I cut up all of the cards and stopped using them. This is an imperative step because when you have a credit card, you can live beyond your means. Without, you cannot. When I walk into Gap now, I don’t run around the store with a blind eye to a price tag; I don’t leave with $300 worth of clothes that I will find in the back of my closet a year later with the tags on them. Now I go in with a coupon and just get what I need or really want. Is it as fun, glamorous and impressive? No. But what is impressive is watching the figures grow in my savings account! (Note: There are two reasons I recommend that you do not close the accounts. One is for legitimate emergencies (new shoes are not an emergency). The other good reason to keep them is if you have bad credit. It is extremely hard to get a new card when you have bad credit, and you cannot build your credit unless you use credit. I am still off credit cards, but when I do return, I am going to use one with a very low credit limit, like $300, just to make sure even if I max it out that it is never too much for me to pay off in one month).
Keep the Change: As much as you like to think you dip into your change, odds are you probably do not do it as often as you think. I used to pick out change in my car for a coffee or snack on the road. Try going without and saving all of your change in a jug. At the end of a set period of time (maybe 3 months?) find a local bank or credit union that has a change machine free of charge. You would be surprised how quickly that loose change at the bottom of your purse can turn into $20, $50, or even $100 dollars! (If you use Bank of America, try their “keep the change” savings account. If you spend $3.60 on your card for example, it would charge you $4.00 and put the additional $.40 in your savings account. I have been using this since October, and my Keep the Change account says they have put over $300 into that account!)
Do it yourself: How often do you stop at a coffee shop that is right by your house? This is one area that I struggle in because I am one of those people that is convinced “I don’t have time”. So lets break it down and make myself look bad! I currently spend $3.90 per day on coffee (two per day). That equates to $27.30 per week, $109.20 per month, and $1,419.60 a year!?! If someone stopped me and asked me at ANY given morning, if I had time to spend 5 minutes making a cup of coffee to get $1,419.60, there is no doubt in my mind that I would be making it. ALWAYS look at your spending in how much it costs you in a year, and see which things you can replace and do yourself (make at home).
What are your smart savings and spending tips?