Making the decision to pay off your debt isn’t easy. You have to create a budget and figure out which debt to pay off first. Another part of successfully paying off debt is knowing which spending habits are keeping you in the hole.
Here are some must-know personal money management skills, including good habits to save money, that will help you now and in the long run.
Create a Budget
The first thing you’ll want to do when analyzing your money habits to pay off credit card or personal loans in order to reduce your debt load is to create a budget. By budgeting, you know exactly how much money you have coming in, how much needs to be put toward bills, and how much you can afford to save each month.
With a budget, you can more easily identify problem spending areas. When you see the amount of money that you’re spending eating out, you may be willing to cook at home more often.
Having a big picture of your financial standing makes it much easier to see the light at the end of the debt tunnel.
Don’t Keep High Credit Card Balances
One of the biggest and most common culprits that cost many people extra money is carrying credit card balances. More often than not, credit cards have double-digit interest rates, which mean that a good percentage of your payment is going toward interest. This can cost you hundreds, sometimes thousands, of dollars in a year.
In order to escape debt, you’ll need to pay much more than the minimum balance due on a credit card. Whatever extra money you have, put it toward paying down the balance. This way, less of your money is wasted on interest fees.
It’s also important to get into the habit of charging only what you can afford to pay off each month. Paying off your balance each month is one of the many good money habits that will improve your financial standing.
We live in a world of impulse buying. When we see something that we want, we buy it on the spot. The same goes for monthly services. We typically choose the company that we’re familiar with—but, without researching and comparing prices, you could be missing out on serious savings. You can save hundreds of dollars a year by looking for savings on:
- Internet and cable service
- Insurance coverage
- Phone service
One of the best ways to save on monthly services is to bundle them. Most providers that offer phone, cable, and internet will offer a lower price if you sign up for a package deal that includes all of those services.
Save for Retirement
When you’re young, retirement seems so far away. Many of today’s younger generations don’t put much toward their retirement, but this is a financial decision that can have a serious impact on your future financial health.
Instead of waiting until retirement is knocking at your door, start saving as soon as possible. Learn about 401ks and IRAs. Choose an employer that offers a solid retirement savings program with matching and other perks.
Also, get motivated for retirement! Even if you’re young, picture the things you can do with all the money you’ve saved over the years. The more real retirement becomes, the more likely you are to put money aside toward your future.
Let TPFCU Help You Meet Your Financial Goals
There are many different ways you can escape debt. While you’ll want to improve your money habits, you’ll also want to look at the many available financial tools that can help. At TPFCU, we offer a variety of financial services that will help you save and earn money.
Wondering “What do credit unions offer?” TPFCU offers certificates of deposit, savings accounts, and even checking accounts that pay you for making purchases!
No matter if you want to learn more about our services or to discuss how to escape credit card debt, our team is here to help. Call us at (806) 359-8571 to get started on the right path toward becoming debt-free.