The dreaded “D” word… debt.
We are so reluctant to talk about debt, and yet, millions of Americans are living in extreme debt, characterized by money that is owed in the form of credit cards, mortgages, medical bills, loans, or student debts. There’s no two ways about it: living in 2019 is expensive, and it can be hard to manage paying the bills and paying off debt all while trying to keep some money for yourself at the end of the month too.
I strongly believe that it’s important to have open and honest conversations about debt, because money is something that we all have to deal with and many of us struggle with managing silently. Especially with non-standard employment on the rise, lots of women in particular have strayed away from typical 9-5 jobs with security and great benefits. So, it becomes all the more important to understand how to manage your money effectively in order to prevent crippling debt that increases your stress and anxiety.
Being a modern woman means understanding how to manage your money like a boss, and there are always more things you can do to cut back, save, and track what you’re spending. Quite frankly, the more you save every day means the more you have in your bank at the end of the month — which means the closer you are to being debt-free.
Easier said than done for sure, but if you’re currently in debt or are trying to manage your money more effectively, you’ve come to the right place. Here are my 4 debt hacks for the modern woman.
1. Make a Budget
“Annual income $20, annual expenditure $19.60; result happiness. Annual income $20, annual expenditure $20.6; result misery.”
This famous quote from Charles Dickens’ book rings true. Even though the expenditure is not that big of a difference, the result is either spending more or less than your income. Translate this amount to your salary, and the difference of a small amount of money could mean misery instead of happiness.
Don’t spend more than you earn. And the easiest way to do this? Make a budget and stick to it. Make a habit of assessing what you are spending each month and create a budget for yourself that is realistic and practical for what your life is actually like. If you don’t set financial parameters for yourself, you will not be able to effectively save money. Sometimes, just seeing where your money is being allocated is a big enough wake-up call that can get you to change some things.
Sit down and take an inventory of how much you are bringing in each month and first things first, deduct your bills — the things that every month no matter what, have to get paid. From there, subtract the essentials that are still important, such as gas, groceries, and clothing. When calculating your budget, don’t forget about miscellaneous expenses too. Your daily Starbucks, lottery tickets, or bank transaction fees add up. By calculating these purchases into your budget, you can see if there’s room, or if you can get by with making your coffee at home each morning instead.
2. Live Within Your Means
“If you can’t pay cash for it you can’t afford it.”
This may seem obvious, but all too many of us get a promotion or a small bonus at work and immediately think of where it’s going to be spent. I see lots of people who fill their life with expensive things and luxuries that they really cannot afford. Living beyond your means is easy in today’s day and age, when purchasing things on credit has become the norm. Spending more than you can afford could look like always having a balance on your credit card, not having an emergency fund, constantly paying overdraft fees, or that you’re saving less than 5% a month. These are red flags that could put you in a detrimental debt situation.
But my advice? If you can’t pay cash for it, you can’t afford it. Just because “everyone else is doing it” doesn’t mean that you should too. Credit cards are great if you can pay them off each month, but they make it too easy to spend more than you can afford. Don’t feel pressured to buy that handbag just because you see your friends doing it. Spend within your means and you won’t have to get to a point where you can’t pay off what you’ve spent.
3. Practice a 48-Hour Rule
“Patience is a form of wisdom”
As a woman, I understand how impulse purchases work. You’re in the store and you just absolutely cannot picture yourself without said item. But then, that jacket you swore you could wear with anything is still sitting in your closet with its tags on, and by practicing a 48-Hour rule, you could’ve prevented this unnecessary purchase. By waiting 2 days to decide on an item, you eliminate the likelihood of getting swept up in the moment and buying something on impulse. Wait a couple of days and you will be able to decide with logic rather than impulse in the heat of the moment. You will come to realize that the majority of things you feel you need in the moment are actually not necessary at all. When you buy with a purpose you are ensuring that you’re not wasting money on things that you don’t really need.
4. Treat Credit like Debit
“Procrastination is like a credit card; lots of fun until you get the bill”
Tapping your credit card makes it way too easy to spend money, because it eliminates the thought process behind your spending. When you are spending money and just tapping your card everywhere, you don’t have to think about how much money you’re spending or how the little things add up. Then, when your Visa bill comes at the end of the month, you can’t believe how much you spent and go into panic mode trying to figure out how you will be able to pay for it.
Instead, treat your credit card like a debit, and when you make a big purchase on it, pay it off right away (and if you can’t pay it off right away, you likely shouldn’t be purchasing it). Getting in the habit of paying things off right away and not in one lump sum when your bill comes in at the month means you are being fiscally responsible for what you are spending at the time of spending it. By putting spending off and practicing the “ignorance is bliss” method, you are just delaying your stress and anxiety. This will also protect your credit score in the long run.