Succeed With A Debt Management Plan
So, you've made the huge decision to participate in a debt relief program. What's next?
If you want to survive, you'll have to change the way you live now that you're in debt. Change your eating habits, cut your utility bills, find better ways to get around, find a mentor, get a part-time job, and even use applications to monitor your progress with all possibilities.
Argh. Nobody said getting out of debt would be easy, but combining nonprofit debt relief with budgeting and saving will significantly increase your chances of success.
What is the purpose of a monthly budget? Your debt management strategy may have reduced your monthly payments to only one, but you'll be making those payments for at least three years, if not longer. What would happen if your car breaks down, your refrigerator breaks down, or your air conditioner breaks down when the first heat wave hits if you're struggling to meet your monthly payment with your current spending habits?
That is why you should set aside money for unforeseen expenses per month. If you're like the 60% of Americans who don't use a budget, this is probably not the case right now. But don't be concerned. We will assist you in creating a budget that will guide you on the path to financial stability and navigate every unforeseen pothole down the way.
Restrict Spendings on Your Car
What better place to begin your quest for savings than beneath your hood? According to the American Automobile Association, a car costs an average of $8,469 a year. Taking public transit or riding a bike, or combining the two, is a smart way to save money on petrol, insurance, and new batteries.
Unfortunately, for many people, this is not a viable choice. Trading down to a more economical, fuel-efficient vehicle is a more practical option. This could result in lower monthly expenses – possibly $100 or more – which might halve the estimated annual fuel bill of $1,500. Furthermore, as per the Environment Protection Agency for every 5 mph, you drive above 50 mph is the equivalent of another 18 cents per gallon added to the price of gasoline.
Eat at Home
The average cost of a meal at home, according to different reports, is $4. A restaurant meal costs around $13 on average. Over the course of a year, those nine dollars will add up to some significant savings.
You can save $2,250 a year if you bring your lunch to work. You will save $936 a year by cutting out two restaurant meals a week.
If you need coffee in the morning, make it at home rather than buying it on your way to work. A cup of coffee costs about 17 cents to make at home. Five home-brewed cups would cost less than a ride to the nearest grocery store ($1 or more) and the arm and leg you would spend at Starbucks.
Of course, the easiest way to find out how much money you can save by eating at home each month is to first figure out how much you spend eating out. Make your own budget on the internet and think about the outcome. You'll almost certainly come across some enticing bargains.
Monitor Your Electricity Usage
There are a number of ways to save money on services like energy. Do you want to save money on electricity but aren't sure how? It's not as easy as turning off the lights. Energy bills cost the average household $112 a month. To be honest, failing to turn off all the lights isn't going to cost you a fortune.
The typical modern bulb consumes approximately 20 watts per hour. It will cost you about 78 cents if you forget to turn it off before a two-day ride.
Keeping ventilation filters clean, keeping your blinds closed in the summer and open in the winter, and using a ceiling fan instead of an air conditioner will save you a lot of money.
These three moves will save you anywhere from $62 to $118 per year. The cost of computers, televisions, and other electronic devices can add up to $100 a year.
Where possible, plug them into a power strip and turn it off. You don't have to worry about short-circuiting a device because most electronics have memory chips that reset when the power is turned back on.
Other ways to save money on electricity include raising your thermostat in the summer and lowering it in the winter (make sure it's programmable), signing up for a cost-management plan with your energy company, and insulating your home with easy measures like weather-stripping doors and windows and caulking leaks.
According to a 2019 Consumer Reports survey, being a couch potato has never been more expensive, with the average base cable bill already approaching $156 per month.
It's no surprise that more people are opting to "break the string" on the boob tube.
A digital antenna is a one-time investment of $15 to $50. Sling TV's live streaming packages range from $30 to $45 a month, while streaming services including Amazon Prime, Hulu, and Netflix (excluding live TV options) cost anywhere from $6 to $16 a month, depending on the service and package.
Once you've cut your TV bill in half, focus on saving money on your internet service, such as via low-cost plans for low-income families. Consumers pay an average of $60 a month for broadband, but those who qualify for low-income subsidies will get it for as little as $10. If you don't qualify for subsidies, you can always save money by shopping around, negotiating with your current company by threatening to go elsewhere or purchasing your own equipment to avoid paying rental fees.
By taking advantage of subsidies and low-cost streaming or over-the-air TV options, a low-income family might easily reduce a $250 monthly bill for TV and internet service to something closer to $50.
Better off, unplug all of your electronics and curl up with a good book.
Track All Your Spendings
It's a lot simpler these days, thanks to budgeting apps like Pennies, YNAB, and Mint, which show you your spending in real-time. They update and categorize data from your bank, credit cards, IRAs, and other accounts automatically.
They build a budget that you can carry with you everywhere you go, and they alert you about how your spending today will impact your funding availability tomorrow. It's as if the debt management company's credit counselor is still there, reminding you to stay on track. Best of all, the applications are free and pretty simple to use, even for those who only use their smartphone to make phone calls.
Creditors are watching your expenses whether you like it or not, and hearing what they have to say about your money management can be a useful way to get your financial life in order (and perhaps qualify for better mortgage terms). It's a good idea to check your credit report with one of the major credit reporting bureaus (Equifax, TransUnion, and Experian) at least once a year to see how you're doing financially and to spot any errors in your credit history or personal details. Atlanta Credit Experts will provide you with a free annual credit report.
If you use an app or a third-party source, it's important for those on a debt management plan to keep track of their spending and credit patterns and search for ways to save money to break the debt cycle. Keep track of fluctuations in prices for food, household bills, and other living expenses when planning your monthly budget, and adjust your spending accordingly. If prices increase faster than your income, or your income decreases for some reason, you can need to reduce your spending even further.
If your income is increasing faster than your expenses, avoid the temptation to rejoice by going to the mall or booking an extravagant vacation. Instead, set aside more money in savings each month to build a rainy day fund for when the next financial storm hits.
Get a Part-Time Job
If you're still having trouble sticking to your budget and paying off your debt after cutting costs, it's time to look at ways to boost your cash flow. That entails hard work in the literal sense.
What kind of work you get depends on how much you need to boost the “revenue” side of your budget, as well as what's available in your area and the current state of the economy. There is usually no shortage of part-time jobs available at grocery stores, fast food restaurants, and retail outlets during good economic times. You don't need a second college degree to meet the recruiting criteria, even if they aren't glamorous, interesting, or self-fulfilling.
Here are some possibilities worth considering:
- Make a side hustle out of a hobby or talent. Do you have a passion for home improvement projects? Promote yourself as a low-cost handyman. Do you have a keen sense of horticulture? Request planting, lawn maintenance, or landscaping services from your neighbors.
- Convert your vehicle into a taxi. In larger cities, drivers for companies like Uber or Lyft receive between $15 and $25 per hour. If you live in a smaller city, expect to pay only half as much. Delivering food or grocery orders for UberEATS, Grubhub, or Instacart will help complement this.
- The digital revolution has made it easier to market yourself whether you have a talent such as teaching, publishing, typing, accounting, or babysitting. Websites like Upwork, Fiverr, and TaskRabbit allow people to build profiles, post jobs and interact with people who can support them.
- Are you a natural academic? Tutoring is a rising industry with many opportunities to earn $15 to $50 per hour, and often even more. Students and tutors are connected via Wyzant, University Tutor, and Tutor Matching Service.
- Americans enjoy eating and drinking, and there are often vacancies for waiters, restaurant hosts, and bartenders in normal times. Although the base pay isn't perfect, tips will help you significantly increase your take-home pay.
If the prospect of working an extra 10 or 20 hours a week or giving up Starbucks makes you sad, note that it's all for a good cause. You decided to participate in a debt reduction program because you were tired of bill collectors, sleepless nights, and feeling hopeless. However, there is a way, and you've already taken the first step.
Congratulations are in order, but that is all there is to it. You'll have to keep moving if you want to get somewhere.
Save Emergency Fund
As previously mentioned, putting money away for unforeseen costs, such as emergencies, can be a critical factor in your ability to get out of debt. Participants' inability to meet monthly payments is one of the most important reasons for failing to complete a debt management plan. This is often the product of needing to redirect funds intended for debt repayment to meet more urgent needs.
Set aside 10% to 15% of your net monthly income for emergency expenses, and don't touch it unless it's absolutely necessary. Calculating how much money you need to feel relaxed, how much you can afford to save each month, and pushing yourself to cut your expenses and accelerate your savings are all simple measures you can take to save for an emergency fund.
“Persistence is the strongest force on earth; it can lift mountains,” Albert Einstein once said. It's also the most effective tool for debt management and elimination. Setting and sticking to a budget is difficult, particularly when it involves cutting expenditures that you've become accustomed to and dealing with the inevitable financial emergencies that come with life. Atlanta Credit Experts will assist you in learning more about the requirements for a debt management strategy and determining if it is the best option for you as you strive to reach financial independence.
If it all seems too much, know that assistance is available. A reputable credit counselor/ consultant will assist you in understanding the root causes of your debt and finding ways to get out of it. A little sound advice and a healthy dose of perseverance will go a long way toward making your debt-free path successful and laying the groundwork for a promising financial future.
For more information feel free to visit Atlanta Credit Experts today.