Beware Of “Daylight Spending Time”
Rather than saving energy, daylight saving time prompts us to spend more money.
Good money management skills are essential. Knowing the basics of personal finance, like how to budget and reduce day-to-day expenses is crucial for your financial stability. It makes it easier to manage debt and save money to achieve key financial goals. It’s with that idea in mind that Debt.com created our Money Tips section. It teaches you the latest tricks for saving, so you can rely less on credit to get by.
We invite you to use Debt.com’s easy money tips to improve your budget and financial strategy. And remember, life happens and you end up struggling to pay off debt or rebuild your credit, we’re here for you. Just visit the Debt.com Solutions Center to find debt relief and credit help.
People often avoid budgeting because they think it’s labor intensive and a time suck. Although that may have been true in the past, today’s technology makes budgeting easy. You can find free apps that integrate with your accounts to make budgeting automatic. You can categorize expenses in minutes and set spending targets to keep you on track.
So, don’t avoid making a budget because you think it’s hard. Just find an application that fits your lifestyle so budgeting can become a daily habit.
Debt.com recommends checking with your bank or credit union first! Many financial institutions provide a budgeting tool that’s already connected to your checking account. You usually just need to turn it on and set it up.
Did you know that if you start and end a billing cycle with a zero balance, you don’t pay interest charges? That’s right. There’s a way to use your credit cards interest-free. Simply start a billing cycle with a zero balance. Then pay off any charges you make in-full at the end of the billing cycle. Interest charges won’t apply.
This helps you maximize credit card rewards that you earn. It also keeps your credit utilization ratio around zero, which is great for your credit score. Even better, not carrying credit card debt from month to month is the best way to avoid financial hardship caused by debt.
Most basic savings accounts have interest rates of less than 1%. You only earn a few cents every few months. This is no way to make your money grow and you need better rates for savings to be effective.
This means that you need to move money you save into more effective savings tools. Money Market Accounts (MMAs) are savings accounts with tiered variable interest rates. The more you save, the higher your rate goes. You can also use cash equivalents, such as Certificates of Deposit and Treasury Notes. These are lower risk investments that off higher yield.
A spending leak is a recurring expense that you either don’t have figured into your budget or you consistently overspend in that category. For example, you spend $1.50 every workday at the vending machine or you get a $3.00 cup of coffee every morning from Starbucks.
These small incidental daily expenses can seem like nothing to worry about. However, they cost more than you’d expect over a year. If you cut out that morning cup of Joe, for instance, you could save $1,200 per year!
If you must consciously think to move money into a savings account, there’s a good chance you won’t. Making contributions to savings accounts and other accounts like your retirement investment account automatic is the best option.
You can ask your HR department to split your paycheck Direct Deposit. They can send most of the money to your checking account, then send some to savings. This way, the 5-10% of your income you’re supposed to be saving each month becomes automatic.
In addition, 401(k) contributions can be set up through your employer. Check to see if 401(k) enrollment is automatic or if you must set it up. Then retirement contributions become automatic, too. You can also set up recurring monthly contributions to your IRA.
You don’t have to sign up for a credit monitoring service if you want to know what’s in your credit report. Federal law mandates that every consumer can review their credit report once every twelve months free of charge. You simply go to annualcreditreport.com.
Answer few security questions to confirm you’re you, then you can download your report from each credit bureau. Then you can review your reports to…
Even if you can afford the bills on your high interest rate credit cards, you will spend a lot of money to get out of that much debt. Interest charges increase the total cost of getting out of debt. At a certain point, when your balances get high enough, high interest rates simply hinder your ability to reach zero and make debt repayment completely inefficient.
So, once you’re balances get that high, you need to look into debt relief options – even if you’re not struggling! Consider a balance transfer to move the balance to a card with a 0% APR introductory period. This will give you 6-18 months to pay off your balance interest free. You can also consider a debt consolidation loan.
A recent government report found that about 50% of student loan borrowers overpay. There are a range of student loan relief programs that can make it easier or faster to pay off your loans. But people often don’t bother exploring these options until they face financial hardship.
Even if you aren’t struggling to keep up with your payments, there could be a more efficient way to pay. Our top student loan money tip is to at least look into consolidation, refinancing or a repayment plan. You could find a way to save money on interest charges, pay off your debt faster or lower your payments so they fit your budget better.
People think that filing a tax extension simply postpones when you need to file your taxes. However, taxes are always due on the 15th of April (unless it’s a weekend). If you owe the IRS money for last year, then penalties and interest start to accrue immediately. This is true even if you file a tax extension!
So, don’t just use tax extensions because you are a procrastinator. You could be taking money out of your own pocket.
One of the easiest things you can do to improve your daily budget is something that most people ignore. You can ask your HR department to decrease your tax withholding. This will eliminate your refund, but it means you get more money out of each paycheck. This improves the daily cash flow in your budget.
Just be aware that a tax refund is not the government paying you. It’s the government giving money back that you paid them. Overpaying income taxes effectively means that the government holds your money in an account that earns no interest. There are dozens of other things that you can use that money for that would be more useful. So, if you decrease your withholding, you stop the financial waste.
Just be careful not to decrease your withholding too much. If your payroll tax withholding is too high, it can lead to tax debt.