A few weeks ago I was determined to eradicate my debt, but I've changed my mind. I've decided to make slightly above the minimum payments and save every cent that I possibly can. I know that Suze Orman has recently advised this, and she is being slammed for it. But I think this is good advice for me right now. For one thing the majority of my debt is on a very low APR. This means that even if I make the minimum payment, I am still putting a dent into what I owe. And I'm not going to make just the minimum payment. My plan is to round it up to the nearest 100. So if the minimum payment is $140 I'll pay $200.
Right now I have little to no savings. That puts me in a very vulnerable position. If something unexpected happens, say my cat gets sick and I have to rush her to the vet, I will most likely have to whip out the credit card. It's important that I have a cash reserve for these emergencies, so I need to accumulate some cash and fast.
So here is what I've been doing for the past few weeks and I've already set aside a little nest egg.
1) I've given up convenience.
I looked over my budget and saw that what I was spending most of my money on was convenience. I had food delivered and had to pay extra for it plus a tip because it was convenient, I paid $1.50 to get cash from the A.T.M instead of my own bank which would have been free because it was convenient. I purchased a single pack of aspirin at the bodega instead of getting a jumbo size bottle at the drugstore because it was convenient. $1 here $1 there, it all adds up. Well convenience is too expensive. I need to be inconvenienced and save my money. If this means that I have to walk a few extra blocks for the no fee A.T.M then so be it.
2) I've stopped using my credit/debit card for purchases and started paying cash.
This kind of goes with the convenience but it's psychological too. If I'm handing cold hard cash for my purchase it tends to bite a little more and I'm more inclined to hold onto it. Also that helps me with...
3) Only spend paper money and save my coins.
This is the most painless way to save money and it's something I've been doing for years. I have an old coffee can, or a an empty vase and each day, I fill it up with the change left in my pocket. The change quickly adds up. Now I used to take it to the coin-star at the Duane Reade for convenience but they charge, I think ten cents on the dollar. Not anymore..it's going to TD Bank where I can get it counted for free.
Not sure what I'm going to save up for at the moment. Since June 15, 2007 I've been very short sighted. But that is another post.
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