There’s nothing worse than putting off an event, gig, or trip just because of money. It’s like they say, you’re here for a good time, not a long time. There are only so many hours in the day, days in the week, and dollars in your bank account – so it pays to get wise about your money.
- Start an Emergency Fund
Let’s not call it saving. It’s just putting some cash away for harder times. Credit lesson one is that all borrowing costs something, and emergency funds reduce the times you’ll need to get overdrawn at the bank or whack car repairs on your credit card. Try saving 10% of what you take home.
- Drop Some Debts
Think of debts as a drain. The more you have, the more you leak cash. Divide your debts according to what they cost. Open lines of borrowing like store and credit cards quickly drain on your finances – and your fun. That’s because you don’t have to apply every time you need to spend, so you pay more interest for the privilege. Could you manage without one or two expensive cards? If you can, get rid of them!
- Then Plug that Flow
Consolidating debts is just a case of having a plan. In reality, most of us find it hard to prioritise a budget over fun, so let’s work with that. If your best-laid plans fly out the window whenever a one-time-this-weekend opportunity arises, you’re not alone – so take the decision out of your own hands. Let’s say you owe $5,000 on a card and the interest rate is 19%.
- Repaying over five years will cost you $2,782 in interest, at $129 a month – plus sticking to the schedule will be totally up to you.
- You could apply for a personal loan, pay the card off, and let’s say the rate is 7%. That’ll cost just $940 in interest over the same period, at only $99 a month.
There’s no finite schedule with credit cards, and that’s how credit card companies make huge amounts of money. If you paid off the same card using the minimum monthly repayments, it would take you around 38 years and cost more than twenty grand. Plus, the first repayment would be $102 – which is more than the loan repayment!
- Streamline Your Spending
That isn’t about spending less; it’s just spending better. Sit down every time you get paid. Figure out what you owe and pay down some cards, then get bills out of the way, so you avoid late fees. Ditch stopping at the grocery store every couple of days, too. You can save big by planning a weekly shop – and that reduces waste, which is way better for the environment.
Borrow Better, Pay Less
Remember, borrowing shouldn’t rule your life, and you absolutely can own your finances. Most of us will always need a bit of credit; the key is to make it work for our lifestyle and goals – not against them.
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