 Photo credit by Katie Horning of @gallivant.go.delight
For this blog post I am focusing on 2 things: savings and credit card debt. With these being hot topics, I feel we need to explore them a little bit more. When I started writing this entry, I hoped to cover more topics. However, as I wrote I realized I had more to say on these two topics than I originally thought! I am not saying I have everything all together, but my life experiences have taught me a good deal. I feel like we could all use this opportunity to share and grow with each other. Let me know in the comments section if this is helpful information, or if you have another strategy for building savings or getting out of debt that you would like to share!
My rule of thumb is to consistently put money away into savings. That is the bottom line. The amount of money does not matter as long as it is being done on a consistent regular basis. Start small! $5 this week, maybe $10 next week… Or $25 this month, and $30 next month. Do not set yourself up for failure by having savings goals that are too large. The point is to create a habit of saving money. Set a goal that by the end of the year you will have saved $100 without touching it! Then, backtrack… If you think it is going to be hard to put money away this month set a goal to do $20 next month. If you set aside $10 a month, you will have surpassed your initial goal. See? It is not that hard! Once you accomplish a small goal, then you will feel encouraged to set your goal just a little bit higher next month or next year! I realize debt is a very real thing for a lot of people. It is hard to shake. It is carried over from prior years, and sometimes we defer it and defer it and it becomes an even bigger hurdle to move past. The thought of it seems daunting and sometimes it seems easier to ignore. To which I say, do not ignore it! Here's an exercise (Yes, I'm giving you homework on my blog!): For those who have credit card debt, look at the past 3 credit card statements and write down how much you have been charged in interest. Then add those 3 together and multiply the total times 4. That figure is an estimate of how much you will pay in interest in one year. This will not be a fun reality to face. But, I guarantee you that once you put pen to paper you will realize the amount of your burden, and how that burden is not worth carrying into another year. Start making strides NOW to pay it off. 
These harsh realities are usually not taught in school but learned once we enter the real world. So, after you graduate high school and go into college and receive a credit card offer, and that offer looks really good to you, you may be thinking, “Hey, why not?! I could use this!”. I realize that there are some parents out there that are very good about training their high schoolers and college aged kids how to face the reality of these responsibilities. However, some parents might not even know how to best navigate these issues themselves, perhaps no one taught them either. Instead of looking at a credit card thinking, “I have $1,500 to spend”, the owner of that credit card needs to look at it as an obligation, something that needs to get paid back by the end of the statement cycle.
I know what I am proposing may seem challenging, especially when you already feel overwhelmed by the amount of expenses you are responsible for in any given month. The key is to prioritize. When I mention the word “prioritize” I am not talking about paying the rent and utilities first over going out to eat, although that is a very good practice! When I talk about prioritizing in your budget, I mean identify what you are paying for on a monthly or consistent basis that is simply not needed. *Let's be real with each other here.* Do you have credit card debt and have a monthly subscription to a music service? When I say prioritize I mean get rid of the monthly subscription to the music service as a means of minimizing and eliminating things that are unnecessary. Instead put that extra $10 into your savings account each month and listen to the free version of Pandora. Other examples could be clothing, shoes, purses, electronics, the list really goes on. When it comes down to it, the stuff we have today can, and will, last us if we take proper care of it. So I encourage you to take a hard look at your purchases, and only buy the items you really need. Okay, maybe I lost some of you there because you are tethered to your electronics, and always feel like you need the best of the best. Or maybe that is your conscience seeping thru to you wanting to ignore the voice of reason . . . Now, if your credit card debt has snowballed into an amount that is too large for you and your salary to swallow, then schedule your consultation with me immediately. Confidentially, we will see if you and I can figure out a plan to handle the payment or if you should go with a debt consolidation company. Use this handy-dandy credit card payment calculator to see how long it will take you to pay off your debt. Click here to use it. At this point, you may be thinking… “Why even use credit cards to get yourself into trouble?”. When used appropriately credit cards can be a useful tool. Having a credit card can help build your credit and give you bonus points to get a bunch of *FREE* things. However, if you already know you are abusive with your credit cards, until you can create a healthy habit, use cash for your everyday purchases. Happy Calculating!
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I know, I know; there’s a really cool TV show on right now that is way more entertaining! Well, there is no need to worry or stress about this topic. I am here to help! I am going to break this down as simple as possible.
Most would agree that it is essential to have a budget, and stick to it. But, do you really know WHY that is? As we journey through life and become more and more established, we must think through the role our finances play as we learn and grow. The future is rich with treasure for us to attain, are we financially prepared for it? Are you hoping to purchase a new car or a new home? Perhaps you are planning on getting married and having kids? How will you prepare yourself if you don’t start right away?! When I speak with people about budgeting, they often tell me that they just want to know how much extra money they have for their own discretionary spending. Whether it is on coffee, fast food, getting your haircut or nails done, clothing, and the like. However, that’s not the place we should start when creating a budget. To start, let’s look at setting up a basic budget, which is used to monitor your income and spending. When starting off on creating a new budget there are a few essential categories that you will need to take into consideration such as: fixed expenses, variable spending, and periodic spending.
Now, I know what you’re thinking… But, Edrina, I have credit card debt? How do I factor that into my budget? To that I would say, stop spending more than you make! But, seriously... I mean, of course we are all guilty of this at times. I just love to go shopping! But, having restrain and sticking to your budget is more fulfilling than being in debt. As you create the foundation to what your budget should be, this allows you to become more aware of your spending habits and how to create boundaries as a way of monitoring where your money goes. You end up on the forefront, becoming in charge of your finances, rather than allowing your finances to be in charge of you. You might also be thinking, so -- what should I do with that net balance? How do I manage that? Well, you are in luck! The focus of the next blog will be spent on topics such as creating and maintaining savings, as well as paying off and preventing debt!
Now, get to it, and happy budgeting!
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