Nobody really wants to talk about it, because it’s a little embarrassing. Money problems. At some point in our lives, we may encounter financial challenges. Sometimes, these events are out of our control. We’ve all heard those horror stories of people who were employed for years on end, who were suddenly let go because the company began cutting costs.
Perhaps the industry that you’re working in has become redundant or is on its way there, such as home telephone companies, video and DVD stores, cable TV providers, retail stores etc. We live in challenging times, and the only certainty that exists is the uncertainty that we will encounter. For this reason, sound financial management is a prerequisite to lifelong stability.
If you find yourself undergoing financial difficulties, you’re not alone. Remember: Success is far sweeter once you know what failure tastes like. Nothing motivates us more than a desire to overcome in the face of growing adversity. Having said that, the first thing you want to do when you find yourself financially challenged is to take stock of your situation.
If you have one final paycheck coming in before your company makes you redundant, do not splurge on a big-ticket purchase. Put that money aside and use it to cover between 1-2 months of expenses ahead of you. All too often, people use their final paycheck to make a big purchase, thinking that this will be the last time they’ll have that money available to do that. Don’t take a vacation on your final paycheck; bank that money because you’re going to need it.
Here Are 5 Important Things That You Can Do to Cut Expenses:
- Take a Snapshot of Your Finances
How much debt do you have? How much do you expect to have over the short-term? How much cash do you have available? How much can you quickly convert into cash if need be? These are important questions for you to answer. If you have mounting debt, that must be firmly in your crosshairs as target #1.
Debt that is easily financed is not a problem, but the lack of income can make seemingly innocuous debt a big problem. Your first point of call is to tackle your high-interest debts first. The interest payments on credit cards, poor credit score loans, and overdraft facilities are notoriously high. Divert your resources towards paying off the higher interest debt first.
- Cut Back on Unnecessary Expenses
When you’re in a financial bind, the last thing you want is unchecked spending. We have all been there at some point or another. After the summer vacations, we’ve got to pay back our credit cards, and this reduces our disposable income. During such times, it’s necessary to reduce discretionary spending on things like entertainment, dining out (Starbucks is a major culprit), vacations, and pet care.
Believe it or not, going away for a weekend when you have several pets at home is not a good idea. The cost of boarding animals or having a pet sitter can quickly mount, so you may wish to consider rescheduling your overnight trips to day trips, or simply making your animal a service animal or an emotional support animal to cut back on these unnecessary expenses.
- Consider Debt Consolidation Options
It’s easy to get disheartened if you find yourself in debt. Fortunately, there are things that you can do to limit how much you pay by consolidating your debt. Debt consolidation loans are increasingly attractive ways of reducing the high-interest repayments on things like credit cards, with a single loan to knock out all those expenses.
It’s shocking to think that the typical American family is $134,643 in debt. Based on that figure, the annual interest payments made by an average American household amount to $1300 per annum. Debt consolidation options allow you to pay far less monthly, making it much easier to manage your finances.
- Spend Less and Pay Back More
This is an interesting one. If you have less money available, you certainly don’t want to be racking up expenses on your credit card. But if you are using your credit card for expenditures, be sure to limit the amount that you spend, and pay more than the minimum monthly payment to get your interest-related payments lower. The best way to use a credit card is to make the payments in full as soon as possible. That way, you get all the benefits of the card (points, cashback, discounts etc.) with none of the pitfalls.
- Proper Vehicle Maintenance
Vehicle maintenance is a major expense item for people. Even with low gas prices, there are many ways to cut back on car costs by keeping vehicles regularly serviced, inflating tires to the correct pressure, following safe driving practices, removing excess weight from the vehicle, and avoiding heavily congested routes and driving times. Anything that can put more money in your pocket is a benefit.