So, if you’ve been following along the past few weeks, you’ll know my ‘bad debt story’ and how I’ve worked on fixing it. Being better with money is something that I’m proud of. I try to share my experience with people so that they don’t have to go through the same stuff I did – please learn from my mistakes!! I know these tips aren’t groundbreaking but they’ve helped me out a lot.
Track Your Spending
I started tracking my spending before I made my budget. It helped me understand how much I was actually spending so I could make a realistic budget. I used an app called ‘Expense 5’, which was really eye-opening – tracking it in real time and being able to look at it at any time was a quick reality check. I’d look and think “wooooah, I’ve spent how much on snacks and Starbucks this week?” – I was quickly able to adjust. Without tracking my spending, I’d have no idea what’s going on.
Use Cash as Much as Possible
I used to watch a money show on TV and the debt counselor always told these people to use cash because it was easier to track. I do try to use cash as often as possible. I find that I am more conscious of my spending if I have to count out the money or I can see it dwindling down in my wallet (when you tap your debit card, you don’t even see your balance go down – is ignorance really bliss?).
Not Using Credit
If you struggle with debt and always being in the red, commit to not using credit. I don’t have credit cards because of my debt repayment program, but I can confidently say I haven’t missed them at all the past two years. I used credit like “free money”, which we all know it’s not. By eliminating credit cards, I get rid of that temptation of spending money I don’t have. I’m much more careful with big purchases now that I don’t use credit – I’m not as impulsive when I know the money is gone instantly.
Make a Realistic Budget
If only I knew this when I first started out. Yeah, it’s nice to think you’re not going to spend any money on taxis all month, but let’s be real. Or it’s nice to think you can only eat out once a week, but is that really going to happen? Be realistic! If there are areas where you know you struggle or will have difficulty reducing your spending, is there somewhere else in your budget to cut the slack. This also is true for rent and living expenses. Is your budget realistic to your expenses and income? For example, I was budgeting to move out and realistically, my rent was $1,400 once I factored in utilities. However, I only budgeted $1,200. What was I thinking? Idiot, Nicole. Don’t be like that guys. If you make commission at your job (or have other variable forms of income), don’t factor that into your budget! Think of it as a bonus every month but budget to live without it. Leave wiggle room in your budget, too. If there’s an unexpected expense, you want to be able to afford it without going too far into the hole.