I know, I know, when money’s tight you have to do some strange things to survive financially. But there’s a BIG difference between eating mac & cheese every night … and buying a new big screen hi-def TV to watch while you eat your mac & cheese!
So you owe it to yourself to correct as many of these mistakes as possible – as quickly as possible – in order to get yourself back on track:
1 - Playing by the creditors rules
Ever wonder why you are paying 19.99% interest on your credit cards? Because it’s a lot easier to pay than to call them up and ask for a break. And because it’s a lot easier than shopping around for a new credit card with a lower rate (if you do this, make sure to cut up the old card – you don’t need to cancel the old account, for credit score purposes, but you don’t want to add to your debt, just lower your interest).
2 - Not paying yourself first
These days setting up a savings account is very easy. Just go online, search for “online savings account”, find the highest interest rate, and set up an automatic withdrawal every month. Even if it’s just $25 or $50 a month, at least it’s a start. And before long you’ll have your own emergency fund (see below).
3 - No rainy day emergency fund
Without an emergency fund, it seems like every expense is an emergency – and then finds it way onto your credit card. You need to find a way to put aside 1-2 months worth of expenses into a bank account that you only use for emergencies (and getting that big screen hi-def TV is NOT an emergency!)
4 - Keep spending what you don’t have
Sure, when you need to spend more than you make just to buy groceries, life is tough. But then you need to look really deep (deep inside your heart AND deep inside your checkbook) for ways to cut your expenses. Do you really need cable TV more than you need food? Rather than driving to the mall, how about driving to the consignment store to shop for clothes? See, you get the idea - if you just try hard, you can find ways to save money.