Money: How to Come Back from Financial Ruin And Avoid Overextending

With the current state of economic woes, there’s a good amount of people struggling to stay afloat. With people out of work struggling to make enough to get by and people who are still working trying to get ahead, there’s plenty of concern for how we are handling our money. Even before the pandemic, most people were finding ways to creatively get ahead of their bills. Now that more people are in a numbers crunch here are some helpful tips on how to better manage your money.

The 50-30-20 method is the most effective way there is to balance a budget. Take your weekly income and divide it into three parts. 50% of your weekly checks should go towards your bills. 30% should go towards recreational/flex spending. The remaining 20% should go into savings or paying down past due amounts. If you can learn to balance your budget in this fashion you shouldn’t be overextended and still can have extra flexible spending.

So if you make $500/week, $250/week ($1000/month) is your budget for necessities. Things like rent/mortgage etc come out of this fund. $150 ($600/month) is your weekly spending budget for things like going out to eat, car payments, your Netflix, and so on. These are things you could live without but setting aside a little bit of money to decompress from the stress of life isn’t always a bad thing.

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$100/week ($400/month) goes into savings or paying down past due credit cards and such. Paying the extra money on credit cards gets you back to zero quicker meaning less interest and a faster means of putting money away. Overpaying on credit cards isn’t as much of a risk as to the more you play, the more that is available should you get into a tight spot.

Another way to pay off debt quicker is living paycheck to paycheck but in different means. Most people live paycheck to paycheck spending what the need to pay their bills and leaving the rest for themselves to barely make it by. The best way to fix this issue if you have a direct deposit is by spending what you need on your day today. Then make sure you have your credit card through your bank as well. The day before your paycheck is deposited, after the banks are closed transfer whatever extra cash you have to your credit card.

Again if you make $500/ week, but spend $400 of it on your weekly bills and necessities, you’ll have $100 leftover. Chances are unless you have multiple past due credit cards high dollar cards, your minimum is not more than a couple of hundred dollars a month. Say $250, by transferring the extra money over you’re paying that card down quicker. The extra $150 will cut your total balance down faster. Then if you get into a pinch that money is still available but chances are this way you’ll see that you can live without it.

Lastly, and the slowest method is paying the minimum plus whatever extra you can. If your minimum payment a month is $50, splurge and pay $55 or $60 dollars. Even the smallest extra amount will cut your total balance down. When you break it down, that’s $1.25 or $2.50 a week. Around the price of a soda, these days would help slowly chip away at a task that seems so out of reach.

We’re all struggling right now when it comes to money, but a nickel and dime lifestyle is a sure-fire way to stay behind. Take time to sneak whatever extra you can to these overextended amounts and you’ll be paid off in no time.