If you make these 7 money mistakes – Time to change your habit!

If I ask “Do you make any spending mistake?” I’m sure no one will be able to answer “No”. More or less we all make or have made money mistakes in our lifetime – some of which we do knowingly and the rest unknowingly. However, if we can be a little conscious, we can avoid making these mistakes. So, in this financial literacy month, I thought of sharing with you some money mistakes we do and how you can rectify them.

    1. You have the habit of spending money you don’t have

Have you ever thought this while swiping your credit card? Perhaps ‘No’. Just think a bit! Do you actually have the money? If yes, then make sure you pay every cent at the end of every billing cycle and not revolve the balance from one billing cycle to another

    1. Not planing and following a realistic budget

This is a point I keep saying repeatedly. Because, this is the most essential aspect of managing personal finance. If you cannot plan a realistic budget, you’ll never be able to forecast how much you can spend on each category and eventually end up spending more without even realizing where your money is going.

    1. Not considering certain non-monthly expenses

There are certain expenses on which we spend quite a significant amount but we don’t consider them in our monthly budget since they’re non-monthly expenses. For example, how many of you consider vacation spending while planning a budget? However, it is much easier to fit it into a monthly budget. How can you do it? It’s very simple. Suppose you’re planning a vacation during the Christmas holidays. Make a plan and divide the amount by 12, so that you can set aside the amount every month. Doing so, you’ll also not fall into holiday debt. Find out, which other lump sum expenses can you break into monthly expenses?

    1. Subscribing to each and every item you come across

How many times have you hit the subscription button received in your mails? If you remember (which is difficult if you have a lot of subscription), go through them again to find out how much you’re paying monthly and whether or not some of them have increased the rate. The trial free version doesn’t continue for long.

    1. At the end of the month, saving the dollars you didn’t use

More or less everyone do this at least in some months, when we don’t feel like planning a suitable budget. . We save the amount which is left at the end of the month. However, if you do so, there’ll be some months in which you won’t save anything. Therefore, follow the strategy of setting aside the amount you want to save and plan your month with the remaining amount. This way, you’ll be able to save a definite amount every month.

    1. Not involving yourself in everyday financial matters

Do you like to pass the responsibility of managing finances, to your spouse? It usually happens that he/she looks after the finances who earns more or the one who enjoys dealing with financial matters, more. However, this is a wrong practice. It is always better to discuss and make the financial decisions together so that both of you can work towards fulfilling your financial goals.

    1. We don’t change our habits

We want to change our situation but rarely we take a step forward. For example, if you aren’t satisfied with the salary you’re getting from your job, take the initiative and try to change your job. There are small changes in life which we can adopt without having to try much. Bigger changes are comparatively difficult to adopt. So, start with making small changes which will have significant effects in your financial life.

Feel free if you want to highlight any other spending mistakes which you think is very common.

Categories: Finance

Is there only one way to consolidate your credit card bills?

In one of my last posts, I briefed about debt relief strategies – the popular ones which you can opt for with professional help. In this article, I’ve thought of discussing about one of the strategies – debt consolidation. There are 3 ways you can consolidate your multiple bills. Go through this article to have an idea regarding the options.

By enrolling in a consolidation program

You can approach a consolidation company if you’re not able to manage your multiple bills on your own. When you go for the counseling session, a counselor, on behalf of the company, will analyze your finances and decide whether or not you’ll be benefitted by enrolling in a consolidation program. As you sign the agreement, the counselor will decide upon an affordable amount which you need to pay to the company every month. The representative will also start negotiating with your creditors to reduce the interest rates on your debts, so that it becomes easier for you to repay the bills. When you make the payment, the counselor will disburse the amount amongst your creditors on your behalf. Thus, you’ll gradually repay all your debts through single monthly payments.

By taking out a consolidation loan

Taking out a consolidation loan is also a suitable way to be out of your multiple debt problems. A consolidation loan is similar to a personal loan which you take out from a financial institution. You’ll be able to take out such a loan at a comparatively lower interest rate if you have a good score. Once you obtain the loan, you can repay all your outstanding credit card dues with the loan. Thus, you actually replace your multiple bills with a single loan; or, it can be said you actually replace your multiple monthly payments with a single one, which you need to make in order to repay your new loan. Moreover, the interest rate on the new loan is usually lower than the sum total of the existing rates on your debts.

By opting for balance transfer

There’s another way to consolidate and repay your credit card bills – by opting for balance transfer method. In this debt relief strategy, you choose a card with the lowest interest rate and with good credit limit. If you have less available credit limit on this card, then at first, repay the dues, so that you have sufficient limit. Then, with your creditors’ approval, you transfer your high interest debts to this card with the lowest interest rate. Thus, you can repay your existing credit card bills with a single monthly payment at a low interest rate. You can also take out a balance transfer card for the purpose. But, such cards usually come with a time period within which you need to pay off the entire amount; otherwise, you need to repay the remaining amount at a quite high rate of interest.

Consolidation – Benefits

Irrespective of the option you opt for, there are some common benefits of paying off your credit card dues with the help of consolidation. The benefits are discussed below:

  • Repay multiple bills through single monthly payment
  • Pay off your outstanding dues in full
  • Can avoid calls from creditors and collection agencies
  • Stress is reduced as gradually you can repay debts in full
  • Easier to manage payments as you need to make only one per month

So, what do you think? Is this a suitable strategy to repay your bills?

Keep reading for other debt relief options, which I’ll discuss in my upcoming posts…

Categories: Finance