With the latest government freeze, it is a good reminder to those who are working that there are many uncontrolled variables that could lead to a financial disaster. When you are working and receive scheduled paychecks it is best to prepare for potential disasters. Many people work to live, meaning that their paychecks go directly towards their cost of living expenses with very little or nothing leftover. In fact, a large percentage of consumers use credit cards or alternative money measures to compensate what their income cannot afford.
Too often, people don’t think about the what-ifs when splurging or overspending with credit cards. When their work is affected by cutbacks, illness or like the present government freeze the upcoming credit card bill will not seem to be as affordable. Even with small minimum payments, the added expense is oftentimes a budget stumbling block.
There are many common practices in which people overspend. It is more of a mindset than it is need. For some people, it is a habit. Reconsider how money is spent to help determine what changes are possible to better support any future financial problem.
*Brand-name products – If you are using a credit card to afford the big name labels, you really can’t afford them. If it isn’t a need, the best way to purchase it with cash. Lots of money is wasted on buying brand names when less expensive products or work just as fine. Months of interest payments add to the initial cost as well. The packaging may be less appealing and the absence of a tag may not impress friends but your finances will appreciate it.
*Overspending on vehicles – Americans love vehicles. Dressing up your wheels with expensive rims or classy paint jobs, upgrading stereo systems or outfitting the ride with individual movie screens for the kids are expenses not everyone can truly afford. The cost is often absorbed onto a credit card. Overpriced oil changes, top-of-the-line fuel prices and car washes will drain the wallet quickly. The love of a vehicle should not take precedence over your financial future.
*Full-priced retail – Between sales, coupons, discounts, and competitive pricing, consumers should not be paying full price for anything. Patience is a great tool in buying power. If you want a certain item, just wait. If you can hold off until the end of the season, prices get slashed.
*Credit cards – They are useful, they come in handy, they open doors to what would otherwise be impossible purchases. They are also trouble and very expensive. This applies to everyone who does not pay their balance off in full with every payment statement. People often have the mindset that credit cards are affordable because of the low minimum payment. What are often forgotten are the interest charges every month that creep into your wallet and further limit your budget. Bad debt from credit cards or even high interest payday lenders should be limited and paid off as quickly as possible. Use third party money for emergencies and pay cash for the rest. Opt for layaway purchasing power rather than buying now and paying interest for it later.
It feels good to have alternative money options, but they are best saved for emergency situations. The interest on payday loans is too high to use for anything but a financial crunch and even then they are bad news unless they can be paid off fast and even then it is an expensive route to take. It is best to start saving now in order to prevent any type of third party money dependency. Plan ahead for the unforeseen, your bank account will thank you later.
