Hey everyone! I’m excited to share my first guest post on AtypicalFinance by Amy Nickson! Amy also has a passion for personal finance and I thought it would be cool to bring in another perspective on debt and living frugally. Please, enjoy and comment! – Tim Jordan
The secret to living a blissful financial life is taking care of your personal finances properly. Financial experts believe that leading a frugal life doesn’t mean pinching pennies.
Being frugal is being responsible with your money.
You must lead a frugal life to get a grip on finance. It also helps you spend less and save money for your security.
However, if your concern is becoming debt free, then you must follow some frugal rules to achieve it. Read carefully.
Rule 1: If you want to get out of debt, stop accumulating more debt. And if you don’t want to accumulate more debt, stop using credit cards.
Credit cards are tempting but dangerous. If you don’t manage it in a right way, it will destroy your financial health with the higher interest rate. So, to get out of debt clutches, stop using them.
Rule 2: Reduce extra expenditures to save as much as possible
You will have to give up extra expenses, including buying unnecessary stuff, that you generally buy for yourself and your home. You need to do this to save as much as possible to pay some extra toward your debts.
Eliminate expenses that you don’t need such as cable TV, eating out, watching movies, consuming alcohol, smoking cigarettes, buying new clothes, etc. It’s difficult, but once you learn how to eliminate extra expenses, you’ll learn to live frugally.
Rule 3 : Create a spending plan following a frugal budget
A spending plan is important. It will help you to understand where your money is going and ensure financial freedom. However, to create a spending plan, you must formulate a budget first. There are many expenses and you must allot a certain amount to every item.
Make sure your budget is flexible because life changes and so do expenses.
Rule 4: Pick a favorable debt repayment plan
To get out of debt sooner, you must have a plan. Some debt repayment plans are great to achieve success like debt snowball and debt avalanche. Pick one as per your ability and stick to it. Thus, you can tackle your debt burden while managing other bills.
Rule 5 : Consider debt as your first bill, but don’t forget about an emergency fund
When you have debts, you must pay them off first. But you have to consider building an emergency fund, too. It’s difficult to manage both, but not impossible.
As soon as you receive the paycheck, go online, transfer a certain amount into the emergency fund, keep a certain amount to become successful in your debt repayment plan. The remaining money will be for the spending plan you have created for other household bills. Thus, you can manage all your bills without hassles.
Rule 6: Consider lifestyle changes and live a frugal life
Many people are living a frugal life. But the question is how can they change their lifestyle? How can you lead a frugal lifestyle? Don’t worry, it’s easy. You just need to change the conventional way of living. You need to change your lifestyle without giving up on your basic necessities.
Some tips are mentioned below:
Take advantage of coupons and discounts.
Save money by using coupons and taking advantage of discounts. Frugality is not being mean, but being thrifty. Use the coupons strategically to get its benefits.
Save 10% of what you make each month.
Saving at least 10% of your monthly income should be your goal. However, try to save a little more, maybe 15% every month.
No matter how much money you earn, you have to save a portion of it to create a strong financial cushion. This money can easily be used for paying off your debts.
Go shopping only when you need to.
Don’t go shopping for fun. If you need to hang out, consider a local park, nature hike, etc. Visit the market for shopping only when you need to.
Say “NO” to gift cards; give handmade gifts.
Don’t waste money on expensive gifts or gift cards. Surprise your dear ones with handmade gifts on this festive season. This can be a jar of handmade cookies or a woolen scarf.
Rule 7: Once you become debt free, take an oath not to be in debt again
Debt is painful. It leads to strenuous financial life. So, try not to get into this trouble again. Consider increasing your income and save as much as possible to build a good financial cushion. Thus, you won’t have to incur more debts.
Strong fiscal health and debt free living is a dream for all, but very few people are able to achieve them. If you want to be one of them, consider some frugal changes in your lifestyle and see the positive difference in your financial life.