How To Save Money Even When On a Low Income

The goal for many folks is to build wealth and save enough money for certain life goals, such as traveling, buying that dream home or car, or achieving a comfortable retirement.   But how are these possible when one is barely surviving financially?  CNN notes that 25 million households in the United States are living paycheck to paycheck, and money could be tight.  Here are ways to still save money and reach financial targets on a low income.

Cut down on major expenses

Go beyond cutting back on small expenses.  Focus on the bigger ones for a more pronounced impact on one’s budget.  Housing costs, for instance, can be dramatically slashed by downsizing to a smaller home or living with roommates or friends.  This can have a greater effect than, say, the usual tricks such as cooking meals at home.

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Get and stay out of debt

Get a good picture of your current financial situation by listing down existing debt and their respective amounts, terms, and monthly payments.  Make more than the minimum payments, as paying debt longer means delaying financial freedom due to ongoing interest.  Be prudent in using credit cards.

Keep entertainment low-cost yet still fun

Having fun does not mean spending a fortune.  Host potluck dinners at home instead of eating out.  Hold movie nights at home and take advantage of free activities such as hiking or free city concerts.  Use coupons or discounted deals for monthly outings and dates.

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Buy only what’s necessary

Don’t upgrade your smartphone or gadgets when not absolutely necessary.  Forego a shiny new purchase if it merely speaks to one’s temporary wants.

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Tips On Managing Your Debts

Mismanagement of debt can lead to long, sleepless nights and great financial and emotional stress. Not to mention they keep you farther from financial freedom.  Here are tips on better handling your finances and existing debts.

The first advice is to prioritize your payments.  Focus on keeping current on secured debt like auto loans and mortgages.  Give high priority to debts related to necessities such as utilities and those you can't just let go of, including student loans and unpaid federal taxes.  The next priority will be unsecured credit-card debt.  

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Second, budget and negotiate.  For example, don’t underestimate the power of speaking with your credit card company to request for a lower interest rate.  Do not wait until you fall behind on payments; you'll get more yes answers and cooperation if you're still current with payments.

Another tip is to consolidate your obligations.  This could be done by putting multiple credit card and loan bills into one loan with a single monthly payment.  One way is to combine student loans, as consolidating them allows for a weighted average of all interest rates.  Another is to transfer debt to a lower-rate card, as some credit cards offer a zero-percent interest rate on balance transfers for a limited time.

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Finally, hire a credit counselor.  Doing things on your own can sometimes get too nerve-wracking.  A counselor will have a debt-management plan in mind and will negotiate on and in your behalf with most creditors to lower rates and eliminate late fees and other penalties.    

Performance Settlement helps clients consolidate and pay off their debts through strategies and solutions tailored to their needs, including the establishment of a third-party trust account. For similar reads, visit this blog.