The struggles of living paycheck to paycheck can lead to maxing credit cards and/or taking out cash advances just to pay your bills. Some financial advisers will suggest that you scrape any extra money you have to pay down your bills while others will want you to pay only the minimum payments in order to put everything else into savings. When individuals are looking at their paycheck and wondering how to make it last to the next paycheck, they may be thinking about how either way can be done.
When a cash advance is your survival kit, it is time to get serious.
Using any type of third party as a means of budget survival will damage your finances in the long term. Years and years of interest payments on credit cards will multiply the initial purchase price on the items you bought. Cash advances carry high interest which can do fast damage if extended over a period of time.
How do you pay down your debt, pay your bills and save money? It’s a tough long road which is doable with dedication.
- Take a serious look at your income. How much money is there coming in after taxes?
- Break down your budget to see exactly how much you owe and what monthly expenses are needed to run your household.
- Compare the incoming flow to the outgoing flow. If your outflow is more than what you bring home, you will need to find a way to bring home more money or cut back.
- If you are a homeowner, consolidating your debt through your equity is an option.
- If you have the income to pay your bills, but still find it hard to keep up with monthly expenses, then you need to look at your daily spending habits for ways to cut back.
- Once you have some excess, split it up. Put some in your savings and the rest towards one debt at a time. Once you start paying off your debt, you will have more excess money to pay down another.
Why is a savings account important when there is lots of debt to be paid? Creating and building a savings is a way for you to catch yourself from a future fall. When you are busy paying down your debt, the last thing you want to do is create more debt. Doing this would be self-sabotaging all your efforts. Building a savings account is like creating your own cash advance company with your name on it. The low cost cash advance will be easy to get, and you will have to focus on getting it returned in a reasonable time frame. There is no high interest (though it wouldn’t hurt to charge yourself a similar amount in order to keep you focused on getting it put back into your savings quickly). Getting your money back in will keep you protected for the next financial crunch.
Give yourself an incentive. Make it fun and keep yourself accountable for the money you spend. Treat yourself with the next month’s payment once a credit card has been paid off before moving on to another one. Do the same for repaying your savings. The more fun you can have making your money work, the better focused you will be to getting it done.
