Wednesday, 5 October 2011

Savings up... debts down... creditfree!

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When you’ve borrowed against an income you may never earn, fear dominates your reality until you become the failure you perceive. Step back from the resource you have, to look at other ways of financing it. Borrowing is NOT your only option.  

Save money where you spend it most
Make regular savings on household spending, using our creditfree categories:  finance, propertytransportleisurehouseholdfashionwelfare and communications

Unsure if the national profile matches your household outgoings?
Pick a DIY budgeting tool to pin-point where most of your money goes, then focus your efforts on the big spenders first. Attempt only one or two at a time, mind you, or you’ll be setting yourself up to fail...

Quit knee jerk denial to avoid benders and binging
Long periods of denial can result in what psychologists call the “what the hell effect”, doing more harm than good. Rotating your efforts means you’re less likely to overcompensate when you do feel hard done by.  

Creditfree not for me?
If you haven’t enjoyed cutting back on a particular category, then for goodness sake don’t just grin and bear it. Contrast a challenging month with some modest celebration, then move on to another creditfree category.

Use nice, round figures to make sums easy
Aim to reduce one area of household spending by around a tenth to a quarter, building this up gradually if your need to cut back is not urgent - no hard feelings if you don’t quite make it yet. Creditfree works best by trial and error, as you learn what you can live without.

At the end of your first month
Pay at least half of your new found wealth into reducing any existing debt. Split the remainder between a reward you would otherwise put on plastic, a charity donation, or savings  - an emergency fund if you don’t have one, a pot for large ticket items or a long term nest egg. 

Due credit!
When you switch to creditfree living there’s no money to pay back, no charges - so why not give yourself credit for what would otherwise end up in someone else’s interest?

 

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Image: thanunkorn / FreeDigitalPhotos.net
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