Whether it’s credit card bills or a line of credit, many of us are carrying debt and trying to get control of our finances. Debts can be debilitating and can often times seem like there is no way out. For some, bankruptcy or a consumer proposal may be the answer. For others, it may be possible to reduce debt on their own. Either way, here are the top three tips you can use to reduce your debt quickly.
1. Track Your Spending
Keep track of every family members spending for three months, and identify monthly expenses. Spending awareness is much easier with smartphones.
Download one of these top-rated, free smartphone apps to track your expenses:
Prism brings together all of your money, your bills and your pay to give you a complete picture.
Toshl Finance tracks your budget when you travel. It translates across any currency, syncs with all of your electronic devices, and organizes billing.
Mint Quickview consistently ranks as one of the best apps on the market. Its user-friendly financial tracker gives you a rundown of spending per each category and demonstrates it with graphs.
2. Build a Budget
After a few months of tracking, you can identify where you need to spend money for necessary expenses versus where you want to spend money for fun.
People who are budget-minded tend to know where their money is going, and have plans for it. Create plans for your money based on the bills you already pay, things you’ll need to buy (like a new car), how long it will take you to save (a year), and review it every four months. Anticipate any big, potential purchases, and build in extra wiggle room for fun spending.
Any extra money, even a very small amount, goes into a savings account. Building an emergency savings with three months of expenses can protect you from relying on credit during a financial bind.
Seasonally spending can hurt your budget. Review last year’s holiday spending and create a separate budget specific to purchasing holiday gifts, snow tires and other car repairs, and warmer clothing.
3. Cut Where You Can
Food is one of life’s biggest expenses. Studies show that buying only what’s on your grocery list eliminates miscellaneous, additional spending at the supermarket. Shopping with cash also limits spending. Try to stockpile food and buy sale items with the goal of skipping one supermarket trip per month. Drink tap water only and use refillable bottles. Make meals at home in bulk, and then pack lunch. Buying generic is also a big cost-saver.
Gas is another huge expense. Although using public transportation tends to add an average of 15 to 20 minutes to your day, it is more cost effective and less stressful than driving.
These basic approaches to money management might not eliminate your debt, but they will start you on the right track. If you need further help, contact our office today for a free, no-obligation consultation.
