Do you sometimes find yourself coasting on fumes as you approach payday? Are you scratching your head wondering where all the money went? Surprisingly, it's usually the small things that derail a budget. Here are some common pitfalls and strategies to sidestep them.
1. Disregarding Minor Purchases
You probably don't give a second thought to your daily visits to Starbucks. Even if you go only on weekdays, that's approximately $100 per month with nothing to show for it but a caffeine buzz.
Keep a small notebook handy and log all your petty cash-type purchases. Once you have the figures in black and white, you’ll probably find some that you're willing to give up.
2. Paying Bills Manually
Are you still paying bills via snail mail or, even worse, going directly to a payment center? Nearly every business will accept payment online or via checking account deductions. Setting up automatic payments also eliminates the chance of pricey late charges.
3. Failing to Save
Are you one of the two-thirds of Americans who wouldn't be able to cover a $500 emergency? Even if you have an average amount of expenses, it can be difficult to plan for the future, but you'll thank yourself when you're able to weather that unexpected car repair or vet bill without going into debt.
Direct deposit is a painless way to build savings by putting money away before it even reaches your pocket. Digit is a clever (and free!) app that analyzes your spending patterns and automatically transfers small amounts to a savings account when you can spare it. How could it get any easier?
4. Develop the Fine Art of Negotiation
Between the number of defaults and competition from other companies, creditors are often happy to make concessions for good customers. You've got nothing to lose by asking to have annual fees waived or get interest rates reduced.
5. Handle Credit Responsibly
Let's face it: Credit is virtually a fact of life today. Large purchases such as automobiles are impossible without it, and sometime life throws you a curve that requires a temporary loan. How you handle credit is the variable that can make or break you.
Here are some tips to control credit before it controls you:
Don't use credit for impulse purchases.
Don't evaluate a purchase based on the minimum monthly payment. Interest charges rack up faster than you think. Pay as much over the minimum as you can manage each month.
Don't get in the habit of using credit for necessary expenses, such as groceries. You may have good intentions of paying them off immediately, but it takes only one missed payment to start down that slippery slope.
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