Building and Saving Money
This continues our series towards improving one’s financial situation. If you have not already reviewed the following, I recommend reading them first:
Part One - Mindset Changes
Part Two - Understanding Your Situation
Our End Goal
Ultimately, we want to pay off debt making every month a dramatic financial improvement over what you experience today. To do that, we need to create a debt payoff plan. This is not that hard, but it can take time. Before we get to that, I want to identify ways to help us accelerate this debt payoff plan we are going to create. This is done by freeing up cash flow in any ways we can today, making debt payments easier on you and potentially increasing the amount you can payoff each month.
Have I Mentioned Mindset changes?
Everybody’s story is different. How they ended up in debt and how they are struggling with money. This does not apply to everyone, but generally speaking, people spend way more than they need to. Start working to put a delay in your brain before you buy anything. Ask yourself, do I absolutely need this or is it more of a want? Buy what you need, but make a very serious effort to only buy what you need. I imagine many can free up a substantial amount of money every month by changing their spending mindset. Doing so, can dramatically accelerate getting ahead on debt and making everything else easier. As always, when you do make one of these positive decisions, be proud of yourself and truly be happy that you made a decision to support your long term goals. Short term purchases probably often relate to short term joy while long term decisions like this can lead to constant peace.
Take it a step further. If you follow my article in setting up a mint.com account, login and evaluate your previous spending. Look at the last three months of spending you can track including credit cards, checking account, and saving accounts. Now that some time has passed, how many purchases can you identify that you didn’t need, use, or could have easily done without. Use this as motivation and mind set change to help avoid these same mistakes going forward.
Build Some Cash
Everything we can do to jump start our plan will help. Continuing to function how you have without makin changes can make it very hard to get out of debt. Let’s pretend you start putting an extra 25 dollars a month towards a decent sized amount of debt. It is going to take a very long time just to pay off that one piece of debt. What if you have many?
With that said, let’s see how we can build up cash. Do an audit of everything you own. I am mostly speaking about the small things. This step doubles as a clean the house and make some money while at it. Chances are you have things laying around that you no longer need. Gather everything that could be worth money and figure out the best avenue to sell it.
Consider sites like craigslist and ebay for larger items as you can reach a larger audience. The local paper can be a good site for local sales. Check facebook for local pages. Often cities have local or tri-area pages dedicated to listing items for sales that people locally may want. For smaller items, consider gathering them together until you can run a garage sale.
We recently ran a garage and had a lot to sell. I expected to bring in between 300 and 500 dollars. Over two days we ended up with a much cleaner house and over 2,200 in profits. My point being is that old items you don’t need may be a huge step towards getting you started on your financial plan.
This completely depends on your situation, how fast you want your plan to move, and how much you are willing to sacrifice. Have you over spent or maybe purchased larger items that cramped your financial situation more than you expected. Considering moving on from these items temporarily. Think big toys like boats, campers, motorcycles, and anything else like these items that are toys or enjoyment items. While I know they are fun, if you moved on from them, you can always get them back later. Removing major loans like these or using the profit from selling them can dramatically decrease the time it will take to change your financial situation.
Make the Little Changes
Small changes can accumulate to substantial savings. Below is a list of changes you can make that will add up considerably every month.
Stop purchasing drinks. This includes pops, coffee shops, juices, bottled water, and anything else like this. Replace with water you get from your house for free. Watch the cash build up.
Reduce your cell phone plan. Do you need that much data? Does your provider offer better plans? Can you switch to a different provider with better plans?
Call for deals. TV, phone, internet, and alike companies will reduce your monthly bill if you call and tell them the bill is too much for you.
Considering removing your TV provider. I recently switched from Dish Network to using a digital antennae and Hulu. This saved me roughly 90 a month and I don’t miss it.
Unplug devices when not in use. Devices are getting better but anything that has a block you plug in (think laptops) will drain power while not in use. Other devices without the block will do the same but not as intensely. Anything that you do not constantly use, considering unplugging until needed.
Install LED lights. They cost more up front but last a very long time, and use a fraction of the power incandescent bulbs do. As bulbs break I replace them with LED lights that way it is not a major cost. Just a box here and there. Most my house is now converted and the monthly savings are noticeable.
Go out less. Restaurants, movies, drinks, activities, and all of those other activities cost money. Substantial money. It is easy to spend 100 dollars to go out to eat and watch a movie. Eat at home and enjoy something from Hulu… 100 dollars still in your account.
Ease up on the AC\Heat. . I know it is nice to be extra comfy, but this comes at a cost. Try to turn down the AC and heat and adjust accordingly. Over the course of an entire winter or summer, this can equate to serious dollars.
Reduce monthly bills. Use mint.com to understand what other monthly bills you have. Is there a way to reduce them? Either through the provider or changes you can make? Do so and this will be money in your pocket every month.
Reduce electricity\gas usage. Turn off lights. Open windows when the weather is nice. Make energy efficient purchases (think washer, dryer, refrigerator, and freezer). Use the TV less and turn it off when not in use.
The goal here is to help you realize how many place you can save money. Even the small decisions will add up. Start taking a little more time to evaluate your purchases. Do I really need this? Are there more energy efficient options? Periodically look over your monthly expenses and evaluate if there are improvements you can make. This kind of thinking is what will free up the money necessary to make long term changes. Short term sacrifice for long term gain. Short term is temporary while long term is for the rest of your life. Good for you for making this far. Now do something about it and improve your situation. You can do this!