Take the Frugal Living Challenge! Step 3: Pay It Off

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Take the Frugal Living Challenge! Step 3 Pay It Off

In this third installment of QuickQuid’s “The Frugal Year Challenge,” I’m going to discuss why it’s important to pay down your bills as quickly as possible and some methods of doing so in order to avoid costly and unnecessary fees.

The first thing you have to remember to avoid additional fees is to pay your bills on time. Every time you miss a payment, you’re in danger of being slapped with a late fee (plus interest on top of interest) — a totally avoidable consequence if you stay on top of your finances.

To ensure that you have enough money to pay all your bills sufficiently and on time then, create a budget that details how much you make and how much you owe. With everything on paper, it’s easier to appoint money to your debts and keep those debts consistently on the decline when it comes time to write the cheques at the end of each month.

Remember, too, that you shouldn’t just make the minimum payments, especially on credit cards and other accounts that have interest rates. Making minimum payments will not only keep the debt lingering over you like a black cloud for a lot longer, but it will cost you more in the long run because the billing institution will have more time to charge interest on the existing balance.

Of course, I understand that there may be a reason you’re in debt in the first place — you just don’t have enough money because of emergency expenses. In that case, you’ll need to be financially creative so you don’t find yourself drowning in a sea of collection notices.

 

To help you bring in more income this month and meet your Frugal Year Challenge goal of £250 saved, here are a few moneymaking and saving tips:

1. Take a look at the interest rates on your bills. Whatever the rate — three percent, five percent, etc. — add that amount to your minimum payments to reduce the amount of interest that will accrue for at least another month.

 

2. Choose one bill that’s at least £250 — a credit card perhaps — and commit to eliminating that debt all together this month. How will you do it if you don’t have the extra money in your budget? Consider these two methods:

 

  1. Take a tour of your home and collect anything of value with which you can part — CDs, DVDs, electronics, appliances, clothes, and more. Separate the goods into categories that designate the way you want to sell them. For instance, large, bulky electronics and appliances will probably sell better on Craigslist, whereas easy-to-ship CDs and DVDs will fare better on Amazon. If you have higher-end pieces, like jewelry, or special-interest items (an autograph or sports memorabilia), eBay is probably the best place to get the most money for those. As an example, I recently sold a slightly used Guinness-branded dartboard and cabinet on eBay for $132. This was a big win for me because I only paid $100 for it brand new. You never know what people will buy and how much they’re willing to pay for something they love. You could be surprised — and walk away with nearly half of your savings goal by selling just one item.
  2. Start a Pay It Off Fund, the purpose of which is to save money to pay off your debts by eliminating recreational activities and daily expenses like store-bought coffee and other luxuries you can live without. If you buy a cup of coffee, let’s say, two times a week, put the money that you would pay for that cup into a savings envelope instead. At £5 a cup two times a week, you’ll save £40 for the month. You can do this for lots of those little luxuries that you generally don’t think much about otherwise, like ordering takeaway, having a pint with your buddies after work, or going to see a movie on a Saturday night. Eliminating these habits can be difficult, but it’s only temporary. You’ll feel better that you did once you’ve paid off your chosen bill.

 

Those are two of the best ways you can bring in extra cash this month to pay off at least one bill that totals at least £250. But there are lots of other ways to make money in a pinch. That’s why I’d love to hear from you on how you bring extra cash when you need it. Let me know your means of making extra money during a tight month. Perhaps it will help someone else who’s in a financial bind, and the conversation may yield even more ideas to help you, too.

Good luck with your Frugal Year Challenge this month and paying it off. Until next time…

The information in this article is provided for education and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.

 

About 

Mikey Rox is an award-winning blogger and journalist whose work has been published by more than 100 regional, national and international publications. Consistently, Rox writes for the personal finance blogs Wise Bread and Money Crashers and lifestyle sites such as FlyLyf and Swagr. Rox lives in New York City with his husband and their two dogs. Follow his OMG! moments on Twitter @mikeyrox.

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