Avoid Debt By Saying No To An Additional Monthly Payment

Monthly payments are often an irresistible trap to get what we want for a small fee.  After all, who does not want the latest car, smart phone or access to the latest on-line movie?  We all want these things, which is why the additional monthly payment is one of the easiest ways to get into debt.

Follow these tips to find ways to avoid another monthly payment and to keep your debt levels within your monthly budget and financial goals.

Avoid Another Monthly Payment Advice #1 – Just Do Not Look.  Say no to any opportunity to go and look at something that you know that you cannot afford or do not need.  I love skeet shooting and the featherweight, engraved high-end shotguns.  My dad had a beautiful gun that he used for skeet and I have wanted one like it for decades.  However, I have college funds, new tires, and retirement investments that I need to make in order to meet my financial goals.  Therefore, I do not go to gun stores and I do not go to “just look.”  The access of credit cards and impulse financing make it too easy to make a financial mistake.  By not looking, you avoid the impulse and temptation to stray from your financial plan.

Avoid Another Monthly Payment Advice #2 – New Things Do Not Bring Happiness.  How many times do we believe that when I get this new car, phone, computer, etc. then it will make me happy and content?  We purchase the item and it does make us happy, but only for a very short time.  Then, we are on to wanting the next item.  The simple realization that buying more does not bring happiness, then it makes it easy to say no.  Instead of looking for happiness in shopping, find something constructive to do.  Take a class, exercise, walk in the woods, read a book at the library, or find a quiet place and just relax.  Understanding that purchased items will not make you happy is a big step that will help you avoid debt.

Avoid Another Monthly Payment Advice #3 – Pay Off Your Existing Monthly Payment.  One of the best ways to remain out of debt is to accelerate your existing monthly payments if you find something that you truly want.  Want a new car?  Then pay off your existing car quickly so you can purchase a new car.  The act of retiring old debt before taking on new debt keeps your personal budget and finances in alignment with your goals.  Debt happens when we over extend our monthly payments so less and less of our monthly income is available for necessities and emergencies.  Then, an emergency happens, we do not have the savings to deal with the emergency, and the monthly payments get even higher.  Paying off your existing debt ahead of schedule before taking on new debt keeps your debt levels and financial obligations in line.

Avoid Another Monthly Payment Advice #4 – Expand Your Emergency Fund.  Expanding your emergency fund seems to be one of the least exciting and certainly least satisfying things that you can do with your income.  You have items you want to buy, bills you want to pay down early, and you have to set even more money aside in case something “happens.”  Building your Emergency Fund larger helps you to be prepared for even larger financial emergencies.  A roof repair, a health emergency, and even a major car repair can throw monthly financial obligations into massive disarray and start down the path to serve personal debt.  A larger Emergency Fund, although unexciting, is the best way to ensure a one-time negative financial event does not lead to a personal debt emergency.

Avoid Another Monthly Payment Advice #5 – Creative Store Financing Is Not Your Friend.  Most store sales people are well prepared for the arguments of emergency funds, holding down debt levels, and just saying no.  However, the sales pitch is usually something like a perfect dream.  You use the store financing, drive home with the item today, and then the financing does not start for another eight months, or has very low initial rate, or the item can be returned with “no questions asked.”  These financing methods sound great, but that is where the greatness ends.  Ultimately, these unscrupulous financing methods compound your personal financial debt and do not erase the debt burden.

Avoiding additional monthly payments are one of the key ways to remain on your budget and on your financial plan.  Refusing to shop for items you cannot afford, realizing new things do not bring happiness, paying off existing debt, increasing your emergency fund, and saying no to store financing are the best ways to keep additional debt in check and your financial goals on track.

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‎02-13-2017 07:10 AM

Content provided courtesy of USAA.

By Chad Storlie

 

Adulting 101: Make These Money Moves First When You’re Out on Your Own

Being on your own for the first time and managing your money can be scary. Relax. You don’t have to be a Wall Street pro by the time you draw your first paycheck. JJ Montanaro, a CERTIFIED FINANCIAL PLANNER™ with USAA, recommends these three first steps:

Understand your pay stub

Review your paycheck. Note your pay and allowances, along with withholdings. They’re important when you build a budget, file taxes and plan for future savings. If you have questions, ask your chain of command. Also, visit usaa.com/joiningthemilitary for more money help

Create a budget

First, track expenses for a month, including little things like dining out, movies, coffee and impulse buys. Next, set up your monthly budget so you spend less than you earn. List income and what you spend on rent, car payments and other items. Get help from the USAA® Money Manager at usaa.com/moneymanager.

Start an emergency fund

Put away a little extra each month — say $50 — and aim for $1,000 total so you may avoid being in a bind when unexpected expenses hit. It adds up quick when you pay into your emergency fund first. Keep the fund in a separate savings account so you’re not tempted to dip into it. Track your progress at usaa.com/goals.

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‎01-23-2017 07:00 AM

Content provided courtesy of USAA.