5. Plan your purchases
Save cash upfront for major purchases like that new TV or trip to Disney World.
That doesn’t mean you have to carry thousands in cash around in your wallet. Open a high-yield savings account for your anticipated purchases — not just for big-ticket items but also for big-expense times like Christmas and back-to-school shopping.
You can still use your credit cards and capture any rewards they may offer, but you’ll have the money to pay off the splurge quickly. That will help keep your monthly bills down, your debt-to-income ratio at a reasonable level and your credit score up.
6. Adjust your spending
Life happens. That’s why you should be prepared with enough savings to pay for your living expenses for at least six months. Still, if you get divorced, lose a job, have your work hours reduced or take unpaid leave to care for your spouse or parents, you likely need to cut back your spending accordingly.
Discuss the changing situation with your family to enlist support for spending adjustments, advisers say, as even small purchases add up. Start with your monthly expenses. Can you cut your cellphone plan, curtail your cable bill, kill a gym membership, forgo daily Pumpkin Spice Lattes?
When grocery shopping, clip coupons or find them online or through apps like Coupons.com, and make a shopping list and stick to it.
7. Boost your income
Whether it’s a one-time windfall or income from a steady side gig, use any extra money to pay down debt or boost your savings so you don’t run up more debt.
Technology makes it easier than ever to make money on the side. Whether it’s starting a dog-sitting service, selling goods online or taking a part-time job with flexible scheduling and work-from-home opportunities, there are hundreds of ways to generate extra cash legitimately.
Money Talks News has done numerous stories on the topic. A recent selection:
- “50 Ways to Make a Fast $50 (or Lots More!)“
- “20 Clever Ways to Make Extra Money“
- “25 Hobbies That You Can Turn Into Moneymakers“
More do’s and don’ts
It’s tough to live totally debt free, but you can take actions that will help keep your debt manageable. Do’s and don’ts include:
- Don’t loan money to friends or co-sign loans that you might become responsible for repaying.
- Do track your credit score.
- Don’t max out your credit cards or default on payments. You could trigger a rate bump that will send you further into debt.
- Do negotiate your hospital and other medical bills if you can.
- Do use your emergency fund, if you have one, for emergencies such as illnesses or car breakdowns. That’s what it’s there for, rather than you running up debt to cover surprise but necessary expenses.
What works for you? Share with us in comments below or on our Facebook page.
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