“Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some, but also our collective failure to make hard choices and prepare the nation for a new age. Homes have been lost; jobs shed; businesses shuttered.” Those words echoed across the nation, as President Obama delivered his inaugural speech on January 20th, 2009. Many believe that the worst is yet to come. In order to survive this rough economic time we must all take control and be aware of our spending habits; we must devise a plan to tackle any current debts; and we must prepare ourselves and save money.
Buyer be Aware
The days of not balancing your checkbook and not taking into account every penny that goes in and out of your bank accounts are over. The unemployment rate is now at 7.2% and 2.6 million jobs were lost in 2008, so every single penny counts! Be aware of what you are spending your money on, make a list and take out things that are not considered “necessities”. Prioritizing and making sure that your money is not spent on needless things is the key to reducing your monthly expenses and credit card debt. According to bankrate.com, below are the top 10 things that Americans waste money on:
1) Coffee- Most people spend about $4.00 a visit at Starbucks. If you’re visiting Starbuck’s every morning that equates to $20.00 per week on coffee. That’s approximately $80.00 per month and $960.00 a year spent on just coffee.
2) Cigarettes-According to tobaccofreekids.org, the average price for a pack of cigarettes in the United States is $4.54. If you smoke a pack a day, you’re a spending $1600 a year on cigarettes. Cutting down on smoking, not only is better for your pocketbook but will also be better for your health!
3) Alcohol-Going out to the bar or club during the weekend can add up. With, drink prices as high as $10.00; you are spending about $50-$100 a night on alcohol. The rounds of drinks you buy can add up, not to mention, having to tip your bartender. Doing this every weekend will equate to about $1200 spent each year on alcohol and a hangover you are sure to have the next morning.
4) Bottled Water-A bottle of Aquafina (20 oz.) can cost you about $1.00. If you’re buying a bottle a day, that’s about $365.00 a year spent on something that you can practically get for FREE. This is something simple that you can cut back on, why spend the extra cash if you don’t have to.
5) Manicures-Manicures and pedicures can cost anywhere between $30 and $50. Going to the nail salon about twice a month will cost you approximately $100. Limit your visit to the nail salons for only special occasions. Even cutting your visit to one time a month can save you $600 a year.
6) Car Washes-If you just want a standard wash and dry service, a car wash can cost you about $20 a visit. If you’re washing your car every week that’s about $100.00 a month spent on something you can do yourself at home.
7) Weekday Lunches out-Most people spend about $9.00 a day to eat lunch during the week. That comes out to about $2300 spent each year on lunch food. Take the extra time each night to pack yourself a lunch. Just spending a little time doing this, can save you a lot of money in the long run.
8) Vending Machine Snacks-Snacks sold at the vending machines usually cost about $.75-$1 and will sometimes require more than one bag to satisfy that craving appetite. Take the time out to buy snacks at the grocery store and bring it with you to work so that you’re not tempted to visit that machine every day. Remember, every little bit counts!
9) Interest Charges on Credit Cards-According to indexcreditcards.com the average consumer credit card rate is 14.03%. Typically, minimum payments are calculated to only pay 1%-3% of your balance. So, if you have a card that has a balance of $5000 and you are only making the minimum payments of 2% of your balance, it will take you about 22 years to pay off the debt. So, try to make more than just the minimum payments and get those cards paid off!
10) Unused Membership-Gym memberships can cost about $30 – $40 a month. If you are not using your gym membership, you are flushing about $480 a year down the toilet. Check with your gym, and see if they can place you on a “pay per visit” plan, where you can pay each time you come to their gym. Or, check with the area you live in, some apartment complexes have onsite gyms their residents may use free of charge.
Tackle Current Debts
There are many Americans that are drowning in credit card debt. According to the Credit Research Center at Georgetown University, the average credit card debt client looking for help from a counselor had $43,000 in debt. Of the $43,000, $20,000 was consumer debt and $8,500 was revolving debt. Paying just the minimum payment every month is not enough to tackle those debts. But, what type of non-bankruptcy solution, do people have now that equity has been sucked out of their homes and debt consolidation is no longer an option?
Debt Settlement provides a way for consumers to pay down and reduce their debt without having to resort to bankruptcy. Debtmerica, a debt settlement company, offers a debt reduction program that will reduce debt at an average of 40-60%. This differs from Credit Counseling programs where only interest rates are reduced. Debtmerica’s aggressive approach and program will reduce interest rates, reduce debts, and will enable debtors to get out of their financial rut in about 12-36 months. With this option, consumers are given a second chance without having to go through the grueling process of filing for bankruptcy.
Save Money for a Rainy Day
After budgeting yourself and devising a plan to tackle your current debts, you may find yourself with some extra cash and credit each month. Remember, DO NOT spend your extra cash you have at the local bar! You should save some money for a rainy day. Set a fixed amount each month that will be set aside for savings and put it into an account you rarely check. That way, you forget that the money is even there. A person should have at least a 3-6 month cushion saved up just in case of a loss of job or huge financial strain. In today’s economy, your financial situation can change fairly quickly and you must prepare yourself for any possible scenario.