“Spending Diet or Spending Fast”- Either way a new concept to cut down your debt fast!

“Spending Diet or Spending Fast”- Either way a new concept to cut down your debt fast!

This is fairly a new concept applied by Anna Newells, a Denver-based blogger who paid off $23,605.10 of her student-loan and credit-card debt through this process within a couple of months. Sounds relatively unreal, but it can be achievable as long as you can differentiate your needs vs. wants.

Source

A real life experience of Anna Newells.
According to her,

“With the spending fast, I had no discretionary income."  This meant she would spend the money only on essential needs such as rent or mortgage payment, utility bills, groceries, transportation or vehicle costs.  If it was not absolutely necessary -- then she did not get it!   Clothes, coffees, dining out, movies -- forget it!  She did not get it!  Nothing!  Nada!

 With the spending diet, however, she gave herself a $100 non-need allowance per month, and would spend that on whatever she wanted. BUT the spending diet was way harder than the spending fast, she claimed. “Because with the spending diet, I would try to spend normally -- and then I would overspend!”

How can you apply these programs?

Let me give you an example. Your daily coffee from that high-end cafe is not an essential purchase. Seriously, ask yourself, do you really need to spend $5 to wake up every morning?  Instead, try making yourself a cup of green tea or black coffee or anything that suits your taste.

Always remember that your spending needs should only include necessary or must expenditures such as rent or mortgage payments, transport costs, groceries and emergencies. Always make sure you ask yourself, “Is this absolutely essential?” If it’s not, than you cannot spend money on it!  This takes discipline. Lots of it. Without discipline, you will never last in this program.  But if you do, the rewards -- paying off your debts - are huge!

Anna Newells’ tactics may sound too harsh for most us.  So here is one alternative version of spending diet program.

Give yourself a budget cap combining all of your essentials and non-essentials. This could be your monthly or weekly allowance depending on your pay day structure. You must survive within the budget that you give yourself every time. It is wise to start with the usual amount that you spend every week or month and then start to cut down a little portion from that budget as you progress.

For more money saving tips and financial advice visit www.prudentfinancial.net

Where to save money and start paying off your debts first?

When repaying your debt, first start with your credit cards and say no to minimum monthly payments. Then follow up with your car loans, personal loans and other kinds of debt.

Also, don’t forget to reward yourself after achieving your monthly financial goal, but remember the reward level must stay within your spending limit!

Overdue debts can lead to bad credit rating which will result having poor credit score, minimizing your debt will not only improve your financial condition but also your personal and family life.

LOTS OF LUCK!

Let us know if these methods can be helpful to manage your finance better. Are they practical? Are they durable?

 

 

 

Why it’s important to cut back on using your debit card

The debit card can be so incredibly handy. You need something, you pop it into the machine and presto. You own that item.

Did you know that if you look in the wallet of 9 out of 10 Canadians you’ll find a debit card? And finding a debit machine has never been easier with more than 55,000 ATM’s across Canada.

Interac, an association founded in 1984 by the major banks for the purposes of generating ATM transactions, did a study recently. It was revealed that half of Canadians say debit is their favourite way to buy things and more than a third visit an ABM more than once a week.

The convenience factor, however can make it difficult to assist with those savings resolutions you may have made at New Years. When you use your card to make a purchase at a retail outlet, it doesn’t show you the balance; and let’s face it, seeing your balance always has a sobering effect when you’re making purchase decisions. It should be noted as well, frequent debits also mean potentially higher fees — and that can add up quickly.

Here are some important points to keep in mind when it comes to your debit card.

Minimize bank fees

Whenever possible, never withdraw money from any bank except your own, unless it’s an emergency. A little bit of organizing your route in the morning will always generate a machine that belongs to your bank. If you use another ABM you will be charged a fee from your own bank and a fee from the one you are using. Also, see if you can open a no fee account. Two leaders in this area are President’s Choice Financial and ING Direct. Both banks offer excellent choices when it comes to online banking services with no fees.

Do your homework

All the major banks have accounts customized to your debit card habits. For most of them, with a minimum $1,000 balance you can get a fee package that offers you unlimited debit transactions and online banking. Make an appointment with your bank, or at the very least pick up the phone. The major banks have knowledgeable customer service representatives who are well aware of the various accounts and services.

Give yourself a smaller daily limit

You can created a forced savings scenario by asking the bank to decrease your daily limit. This will stop you from making that second or third debit in a day to buy something you may not need.

Budget realistically

On Monday, take out a sum of cash your budget dictates and stick to it. But be realistic. Don’t give yourself a drastically low amount, thinking you’ll save that much faster. Honestly calculate how much you believe you’ll need. Then, and only then stick to it. Otherwise you’ll find yourself back at the ATM and your budget will be discarded for yet another week.

For more helpful tips go to PrudentFinancial.net