One of the biggest things that keeps people going around in circles financially is living paycheck to paycheck. A lot of people do that these days, and debt is collectively high. There is a modern trend of living beyond one's means, and it's collectively limiting freedoms of people. You want to live beneath your means; not merely within them, and definitely not above them.
Now there are certain things that can't be helped. If you take out a loan on a house or get involved with a mortgage, this can be good debt. Should the worst case scenario arise, you can sell your mortgage and reap back some of the resources you've put into it. But credit card debt, payday loans, and personal loans generally aren't going to do you any favors in terms of financial security.
Getting Over Holiday Debt
With all these things in mind, the holidays are recently behind us, and that means most reading this have likely spent more than they should have in one area or another. In America, average spending in this area is about $700 per person.
Following several strategies to help you both keep from spending too much during the Christmas season, and recover when you've gone past your budget, will be explored. There are always ways to do what you want with what you have; it may just mean treading water in one area or another for a while.
Strategies To Offset Spending
First, check into varying resources to help you obtain the best strategies; here are someimportant financial resolutions you may want to consider. Once you've looked into strategies beyond your contemporary tactics, you want to pick and choose which ones best suit you. Here, means of living beneath your resources will be considered.
How much do you spend “eating out” a month? Would you say it averages $100 a week? You can get the same amount of food at a similar quality for much less. Cut eating out in half through the year and you'll save $2,400. Cut it out entirely, and you just saved $4,800 before you factor in the cost of preparing meals at home. Either way, you can cut out around $2,400; easy.
Do you spend money on a daily coffee from a coffee shop? If it's only $3, you're looking at $21 a week. Throughout a 365 day year, that's $1,095. If instead, you spend $95 on coffee makers, filters, and grounds, you could save $1,000. Now you've recouped $3,400 of your holiday costs without changing your health or comfort.
Let's look at your travel expenses. Is it absolutely necessary for you to drive to work? Can you carpool? Can you walk or ride a bike; maybe use public transit and get a discount from your place of employment? Let's say you've got an eight-kilometer drive to and from work; 16 total. That's a minimum of 320 kilometers a month at five days a week round-trip. That's over 3,860 km a year.
At 9 km and $1.48 per liter, you're spending $2,608 per year alone on your commute. If you can eliminate that through walking or riding a bike, or cut it in half through public transit or carpooling, that brings your total annual savings to between $4,708 and $6,008 without even taking deferred vehicular maintenance savings into account. Also, you haven't changed your life all that much. A half hour's bike ride, an hour's walk, or a carpool can give you the assets you need to succeed.
Making Money For The Next Holiday Season
Now you need to double down so next year doesn't put you out. Well, why don't you put the minimum of $4,708 you've saved through these techniques into a good investment? You might look into something like home remodeling which, properly done, can bring more than twice the value. If you can spend $4,708 and bring in $20k in expanded value, you've done well.
Not everyone has a home or can leverage existing wealth in this way. But if you can tighten your belt by cutting discretionary spending throughout the year, without significant change in your lifestyle, you can save money and eliminate areas you've gone into debt. Yes, it will take a little work; but if you establish a lifestyle of living beneath your means, you will always have a financial cushion; and ideally, it should grow with time.
Guest post by Stephanie Bates of MilitaryTravelMama.com