Who’s not always looking for ways to improve their financial status?
While we might not all share the same goals, I think we can all agree that saving money — as well as spending it wisely — is important. Period. As for me, I’m battling some financial “demons”, if we may call it, and tend to spend too much on groceries and online shopping. The good things in life are expensive and hard to resist! Argh!
So when I came across Life Pro Tips on Reddit and saw that users shared actually good and practical advice on handling money, I just needed to take notes. I’m sure you will find these helpful, too!
On Debt and Credit
1. Organise your debt by interest rate.
According to this one user, it is best to pay only the minimum to all accounts except for the one with the highest interest rate. For that one, you should pay as much as you can. While there are different styles and techniques in paying multiple debts, this one is effective in reducing the amount of your total debt and, at the same time, save money on interest payments.
The user also adds: “In addition, as soon as one account is completely paid off, add the entire amount you were paying to the next account with the highest percentage. Look at it as extra money to pay bills, not extra money to spend.”
2. Use your tax return to make a dent on any debt that you have.
Another user advises that when you get your tax return, instead of using it to splurge on items or even to buy food, it is best to use it to put it toward an interest-bearing debt. You can treat your tax return as a bonus, but it is far better to use it to “free up money every month” than using it in a one-time shopping spree.
Also, it helps if you know how much tax return you can claim. Do your research and ask around!
3. Do not co-sign on a loan for anyone.
Not even your friends and not even your family, not even your children — as rule of thumb, just do not co-sign on a loan for anyone. Consider this especially if someone who is prone to staying in debt asks you for a favour. It’s better to turn them down right away instead of finding yourself in a mess in the future.
As one commenter says, she co-signed on a lease for her daughter. Later on, she found herself owing the lessor $1000, a debt by her daughter’s ex-boyfriend and one roommate. They got away scot-free.
1. If you borrow money from someone, pay them back as soon as you can.
I used to think it goes without saying that if you owe someone, you should pay them back as soon as you have spare money. But some people do take advantage of your kindness, and these people often include your family and closest friends (are you seeing a trend yet?). I know a lot of people who owe their friends five-year-old debts and don’t bother paying — or just even putting a dent on the debt — because they’re friends.
More than the cash, it’s your reputation and integrity that is on the line. People often lose respect for people who don’t keep their word, so don’t be that person. Even if you can’t pay the full amount yet, make the effort to make small payments to reduce your debt! You never know how much they need that money, too.
2. On the flip side, if you lend money to friends or family, be prepared to lose either your money or the relationship.
We already talked about friends and family often taking advantage of our kindness. Unfortunately, this is true to most situations and even if you trust your friends and family 101%, it can still happen to you. As much as possible, avoid lending them money. If it cannot be avoided, be prepared for these two possibilities if you ask them to pay: one, they will never pay; and/or two, they will avoid you like you have the plague.
So if you have to lend your family and friends money, unless you lucked out on relationships, say good bye to either your money or the friendship.