This is part of a Debt Bloggers Network group writing post.
A few people have asked me how I deal with my debt and how I find ways to save money. I do a combination of things to keep my finances straight because I am no financial expert.
Here are some of the things I do to manage my money:
Utilize Credit Rewards
The most important step to me was to create and follow a budget. Before I started blogging I was living paycheck to paycheck and did not know what my money was doing. I would open the mail and get a bill and write a check for the amount, put a stamp on it and drop it off in the mail.
I would make a grocery list and then hop off to Wally World and get stuff that was not even on the list….only to get home and realize that I already had that item. I could not tell you how much I had spent for the month because I was just going with the flow.
I was putting things on my credit cards and not paying them on time and this was building up finance charges all the time.
I decided to track my finances and this meant I needed to find a way to see where my money was being spent every day. To make this easier I decided to use a credit card that gave me rewards and did not have a balance.
Every day I would log my receipts into my little excel spreadsheet so that I could see where my money was going. I would also download the transactions into Money (and then later Mint and Quicken Online) so I could get some better visuals.
Utilize Credit Rewards
I make the best use of a cash back credit card by purchasing EVERYTHING on it. That way I have a receipt that can tell me exactly where my money went and I earn cash back for making the purchase.
Since I pay off the card after EVERY purchase I never have to worry about finance charges. The way I pay the card is simple but it just takes a bit of effort. Every time I make a purchase (and I don’t go buying stuff for $0.20 randomly) I log into ING and send the amount of that payment to the credit card. I have been scheduling the payment for a week from the date of my purchase so that I get that float time.
During the float time my money earns interest in my ING account and the credit card is not gaining interest. Then Electric Orange sends out a payment and I do not get charged any fees because the balance has not been there long enough.
I cut coupons every Sunday because they are a way for me to save money. I used to buy the Sunday paper for $2 every week and this amount was of course included in my budget for the month. Then I found out from Baz that I could get a subscription to the paper for $7.50 a month.
This was a money saver for me in more than one way because it allowed me to:
1. pay less for the paper
2. save gas money because the paper is delivered to my door
I love getting up on Sunday morning and finding the newspaper right in front of my door because that means a whole bunch of new coupons for me. I only get the coupons for the things I regularly buy and make sure that they will save me money.
If I have a coupon and it is about to expire I do not rush out to get the item. I know that the coupons will cycle back and I am sure to get a coupon for that item by the next time I need it. I mainly use my coupons at CVS where I can now get things for basically FREE.
I do about 98% of my banking online because it is cheaper for me. I do have one bank in town that I use to get quarters for laundry and money for church once a month. The rest of my banking is done at ING and I cannot tell you how much I love it.
I live a basically cash free existence and so I do not miss having to touch money at all. I pay all my bills through my credit cards (and gain rewards on some of that) and use ING to pay the credit cards. I set everything in my Electric checking account (which earns interest) to out out every month on a certain day.
That way all the bills get paid and I do not have to worry about due dates for anything. I do periodically (ok every day) check to make sure that all the payments have gone out when they need to but for the most part my finances have been automated.
I have been using some form of snowflake for a while since I began to tackle the debt. I began with the smallest balance first and then once I paid off that debt I switched to the highest interest debt next. I did cash out my emergency fund one time to pay off a debt and although I got some flak for it, this was one of the best decisions I have ever made.
That particular debt was weighing heavily on my soul because it was the result of one of the dumbest financial moves I have ever made in my life. I used up the money in the emergency fund to pay off that debt and I then I was able to better focus on the rest of my debt and my life.
Every time I get a little extra money, whether it be from doing surveys or advertising on the blog, I send part of it as a snowflake payment to a debt. I do not have to pay ING for checks so it is simply a matter of a click and the money goes where I want it to go.
This little extra payment has the effect of lowering the interest that builds up on the long standing debts like the car loan and my Lending Club loan. These extra payments are not included in my budget since this is irregular income so I just treat them as a nice little surprise every time they come in.
Those are the basic things I do to manage my debt and work towards my goal of becoming debt free. Each item takes a little bit of work at first but the rewards are great.