As we come ever so slowly out of the Covid Crisis and move into the “new normal”, people are having to face new challenges, many of which directly affect their ability to make a living and survive. An increasing number of people are forced to rely on payday loans and other instant cash loans in order to survive. Fortunately, some of these challenges can at least be mitigated, if not eliminated completely, by learning how to create and live within a budget.
Creating a budget is comparatively easy in reality, but the trick is being able to live within that budget. If you are a single adult, this should be a little easier so long as you can practice a little self-control. If you have a family, living within the confines of a budget can be more challenging, but is still a very real possibility.
If you have gone into debt because of recent hardships, getting as far out of debt as possible is going to be imperative in order to live within a budget and to have any chance at financial success at the end of the day. In order to do this, you are going to have to pay off the existing bills over the course of time, but there is a method which will make the process ever easier over the course of time.
You will need to establish a list of all of your bills, something which is necessary anyhow if you are going to create a budget. In most cases, credit card debts will be the ones with the highest interest rates and the costliest. To start paying down your credit card bills, you will have to incur debt to reduce the overall, long-term cost of your credit card debts.
Make the minimal payment on the lower interest rate credit cards, paying the excess amount to the highest interest rate credit card. You may even be able to consolidate credit card debt, paying down the owed amounts on the higher interest cards using the lower interest credit cards, though it is best not to get trapped in this situation as it will keep you indebted and making excessive interest payments.
As the credit card debts are reduced to near zero, it is also important to keep your credit going. Keep your paycheck in the bank as long as possible where if nothing else, you will accrue at least minimal interest on your savings. Use your credit cards only to pay your bills, and at the end of the month, pay off your credit card debt in full.
You can do this by using the money that is now in your savings or checking account since you merely set your cash earnings aside and did not spend them as “extra money”.
Some bills will be more expensive at certain times of the year. Electric bills tend to be higher in the winter months, and some people have oil heaters or large propane tanks that only require filling every few months, but cost a few hundred dollars to fill when they are delivered. Hopefully, you have kept records and can determine an average amount to budget out every month. If not, you may have to get a little creative.
What was your most expensive electric bill? Can you budget that amount every month? If not, look for ways to cut down on your electrical usage. How often does that propane tank need filling? How long does it last? Again, base your figures on the most expensive months and budget that amount out.
Are you boiling water or leaving that oven running to stay warmer in the winter? Maybe you are using space heaters, turning them all the way up, and sitting right next to them to remain toasty warm? Are you leaving that air conditioning running 24/7 so your house is nice and cool all the time? Stop.
If you are in the habit of sitting right next to the heat source, you will get colder much easier. Rather, if you get cold during those long winter months, take a walk outside. Seriously. Bundle up, take a long walk, and when you come back, not only will your body be warmer from the exercise, but that 68-degree temperature is going to feel a whole lot warmer now. Once you get back in, avoid spending time right next to the heaters.
If you are troubled by the heat and humidity, start with a hot shower, and gradually cool down the water temp until you are taking a cold shower. This will close up your pores and reduce sweating, which is not ideal for long-term solutions, but will help in the short term. Now, sit with the fan blowing indirectly instead of having the fan blow directly on you. Open the windows and enjoy some fresh air for a change.
Quit burning lights all day and night. Seriously. If you are not in a room, what purpose is there to burn all those lights? Are you getting in your car to drive to the convenience store around the corner? Why? Are you roasting items under the broiler on a regular basis? Leaving refrigerator doors open? Are you leaving the coffee pot on all day? Anything that heats up (and even the refrigerators and freezers) function with a dead short to ground – which means they suck up a lot of energy.
Does that all seem like too much work? Sit down out on the porch with your laptop and enjoy all the YouTube videos available showing you different ways to save money, and other life hacks that can make your existence more bearable.
Why does that convenience store around the corner have the lottery tickets and cigarettes displayed on the counter while the one by the school has pencils and pens? Do you really think it is a coincidence that those magazines that fascinate you (but you would never admit to reading) are right in front of your face at the checkout counter while the candy is annoyingly handy to your small children?
“Impulse Marketing” is a multi-billion-dollar industry. None of these things are there by chance. There are major industries that have focus groups to determine the best ways to part you from your money. Do you really think Starbucks and Subways are baking on site because it is easier or more convenient? No. They are doing it because the smell of freshly baked goods means that you are going to spend more money.
Do you stop at Starbucks or the local convenience store every day on your way to work? What? You do not like Starbucks? Okay. So, you just spend the buck and a half for the cup of coffee, right? And oh yeah, that pack of smokes your wife doesn’t know about? And got to have that box of donuts to share with your buddies at work, right?
And oh yeah, chips for after work, or maybe just swing by the store on the way home and get pork rinds and beer, and maybe some more gum so you can get home without beer on your breath. Or maybe you just stop by the local bar to kill a little time before your significant other gets back to the house?
All of these are impulse purchases and not things that you need. According to government research and as noted on the Motley Fool website, the average American spends $5,400.00 per year on impulse purchases, and over $300,000.00 on impulse buys in a lifetime. Would five grand a year help you to live a little better on a budget?
Second Hand Chic may not go over well with your teen-age daughter who always needs the latest and greatest fashion trends, but a job may help quell her desires ever so slightly. Not preaching really, but just saying. Still, second hand shops, yard sales, flea markets, and other similar venues can be a great place to shop and find some really good bargains.
There are a surprisingly large number of people who have figured out how to turn their love of bargain hunting into a full-time business. People have even gotten incredibly rich by doing a little homework and figuring out what kinds of items to look for.
Groceries? Okay. So maybe you really don’t want to buy the fake Ritz crackers or those Hydrox Cookies instead of Oreos. Never mind that Oreo was originally a “generic” competitor to the then very successful Hydrox cookies – just an interesting trivial fact, but true. Still, groceries are another place you can save a lot of money if you learn how to use coupons, and more importantly if you are a meat eater, how to use the butcher shop r the butcher.
Cutting out impulse purchases alone will save the average American about a hundred bucks a week. Add in a few savings from curbing excessive grocery expenses, and getting rid of those credit card debts, and the average American (never mind family) can shave about a thousand dollars a month off their expenses.
Regardless of how much you save, figuring out what to do with the money can be a challenge, believe it or not. The initial concern for the average person is what they are going to spend it on. Some more reserved people may be tempted to just toss it into the bank. Neither decision will help you in terms of living on your budget however.
Spending the money on unnecessary expenses will quickly find you back into your old habits, struggling just to survive. If you still have unpaid debts, pay them off. Do you have a mortgage you have to pay? Put the money you saved into a secondary mortgage payment to pay down the principal loan amount. Putting it in the bank is easy, but investing it more wisely will yield better financial returns.
Some people may frown on the use of debt consolidation services, but if you are bogged down in bills due to the Covid crisis, they may not be a bad idea, at least until you have enough financial leeway to be able to breathe a little easier. While not always an ideal solution for people who are accustomed to living within their means, the new normal is pretty crazy, and trying, even for the best of us.