*Originally published on 9/8/09
These are tough economic times. People are struggling just to get by. While not a guru, I can offer some advice to help you get back on your feet.
Suze Orman often suggests that you pay off your higher interest debts first. This does make sense. However, I would suggest tackling your lowest debt first. This will eliminate a whole payment. You can then use that money to pay off one of the higher interest balances. Obviously, going from the lowest balance to the highest won't work in the long run. As an initial burst, however, it will help. Knock the one lowest balance off, then from there proceed to pay off the debts based on interest rate. Trying to go from the bottom up would keep you in debt longer. Picking one payment off from the get go will give you a bit more flexibility as well as save you on interest charges, regardless of the rate.
You'll also want to get off credit. Running only on debit or cash will help restrict your spending only to what you can afford. It also becomes a lot harder to pay off your debt when you keep adding to it. I've read that stopping completely doesn't help either. I had one credit card that I never used. The interest rate was high, I figured there was no sense in adding another bill, and it was more for emergencies. They ended up canceling it due to lack of use.
The ideal thing to do would be to toss in a small purchase, a soda or a tank of gas just to show that you are still active with the card. The transaction should be small enough that you can easily pay that and then some. You want to be careful though, those small transactions add up quick. One transaction per card is plenty.
Not buying anything for awhile is smart. The only way to get back on your feet is to cut back spending. However, for the economy to pick back up, people do need to buy things. You can reward yourself for paying off a credit card buy buying something for yourself. Keep the price tag low, but there's nothing wrong with making small indulgences every once in a while. What good is money if you're not going to spend it at some point, right?
Even buying things doesn't have to be expensive. Most stores have a preferred customer program. Best Buy has one, where you get a gift certificate for spending so much money. If you buy a lot of movies or CD's this is a great way to save a little bit of money. Bookworms will love the program Barnes and Noble has. You get a discount on the books you buy, as well as a gift certificate after earning so many points. You really can't ask for more from a rewards program. Comic stores also offer a discount on new issues when you open a pull file with them. There are all sorts of ways you can save money on all sorts of entertainment if you look for them.
Grocery stores have them as well, so you can save money on sale items with store cards. To augment that savings, you can go through the newspaper and clip coupons. One or two won't do much, but if you can find enough for the products that you buy anyway, you can save a good chunk of change. Trust me, I used to work at a grocery store and people got great deals by handing me a wad of coupons.
I don't know if they still do it, but some stores offered double or triple discounts on certain coupons, if they still do that you can make save a good chunk of change.
Speaking of change, that's a great way to save money. Bank of America has a similar system when you use their debit card, but if you use cash you can accumulate a good deal of money. They'll even match a percentage, putting more money in your pocket. A few other banks have implemented similar programs so you have options.
There are coinstars at various stores, so you don't even need to roll them anymore. While you lose a small percentage as a fee, you can still get some good money simply by rounding up all the coins lying around and cashing them in.
Some bills are steady and never get "paid off". Electricity, rent, and cable for example, are always going to be there. There are ways you can even save money there. If your lease is about to run out you can look to see if there is a better deal to agree to. If that doesn't work, find a roommate and move into a 2 bedroom. The total rent is higher, but your roommate will be able to put up half which saves you money. You can even get another roommate if you need it.
You can keep your electricity bill low simply by conserving, turn lights off, don't watch tv and surf the internet at the same time. You can buy light bulbs that use less energy, so you can effect even those bills.
Gas isn't quite as high as it used to be, but it can get pretty expensive. If you live close to some of your coworkers, you can try carpooling. This is fiscally sound as well as environmentally responsible. It will also enable you to use the HOV lane to bypass traffic. If everybody carpools, it will still put that lane to better use as well as put fewer cars on the road at any given time.
If you're working full-time and still can't get caught up, you can try to make a little extra money. I already listed sites that enable you to make cash. If that isn't your thing, you can try selling some things on either Amazon or eBay. This is especially helpful if you're short on space. You can make a few bucks and get rid of some of the clutter.
Things have started to improve, but even with that. It's always a good idea to get a hold of your finances. The more financially stable you are, the better. Whether the market is in a slump or at an all time high, these will help you save money that you can put towards either retirement or just some item that you've wanted for a long time.
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