I am so happy to be continuing with sharing tips and tricks to saving money!! This month’s Get Your Shit Together is all about Way’s to Cut Back on Your Bills.
So far in the series:
- Introduction: How I got here, the place I never thought I would be
- Timing is Everything: Doing a time and spending audit to get you started on the right track w/ free printable worksheet
- I Owe What: Figuring out what you owe and the why it is important to know Free Budget Work Sheet
- Want Vs. Needs: Understand the difference makes all the difference
- Top 3 Ways to Save Money and Time
- The Truth about having a budget: What people don’t really talk about the things you can’t always plan for.
Now Let’s dive a little deeper. What to do when the debt gets to be too much? Options to look into before ruining your credit through debt relief programs and/or bankruptcy.
Consolidate Car Payments
The first thing we did when we started having financial troubles when the medical bills got out of hand, we went to our neighborhood credit union and they were able to consolidate our 2 car loans.
Pro’s to this decision: We were able to lower our monthly combined car payment by ½ with a lower APR.
Con’s to this decision: Took longer to pay off our car which cost us more in the long run, even with a lower APR.
Refinance Your Mortgage
This option is not for everyone. When we found out my husband was going to be laid off this was one of the first things we investigated. We got rejected due to our debt to income ratio. Yes, bummer but for many families, it works so it is worth it to give it a try.
Pros: Lowers your monthly payments
Cons: Takes longer to pay off your loan costing you more money in the long run. Plus sometimes if your credit score decreased you may be looking at a higher APR.
Debt consolidation is taking a handful of debts (credit cards, loans, lines of credits) and putting them all into one account with one APR. This is not the same as debt relief which we will discuss later in another post.
Pro’s: It typically won’t affect your credit score, if anything it will help raise it by allowing you to pay off your debt consistently and sometimes sooner then expected if they were all separate loans.
Con’s: They do have restrictions and rules, and just like other loans late payments or failure to pay digs the debt hole deeper and it does affect your credit score.
Do you really need that?
This one is a tough one. You have worked hard for the life you have built so giving things up isn’t an easy decision, but it is one you really should consider.
Do you need that extra TV or gaming console? Are there clothes you haven’t worn in years you can trade for cash.
How about having a garage sale all those baby toys, clothes, and the things you no longer need?
Can you trade that car for one that will cost you less or nothing a month?
How about that house? Do you struggle to make that high payment every month?
Like I said this part is not easy. These are all rough hit you in the face kind of choices. However, speaking from experience getting rid of the things you don’t use or need, or just trading or downsizing can reduce so much weight from your shoulders.
When we decided to put our house on the market it wasn’t just because he landed a job he hoped to have in 6 months in another state. It was also because it was a money sucker, not just in the mortgage but in the repairs.
I honestly was worried we wouldn’t get the money we needed to pay it off, plus the second mortgage we got for the new windows (when things were going well), plus the cost of the move (since the company didn’t want to help); but most of all I was worried how long it would take because we were barely making ends meet.
It was only on the market 3 months, that is when I negotiated our final deal. The deal paid both mortgages, as well as the move. We got some of our insurance and tax money back that was in escrow which helped rebuild a little emergency fund and give our kids a decent Christmas. I couldn’t ask for it to work out any better.
At the end of the day, my family has a roof over their head with heat and water, they have food in their bellies, and we have each other, family dinners, family nights, all the money and belongings in the world can never replace these things.
Just like prioritizing your bills sometimes you need to do the same for your life.
There are simple steps you can make to ease the stress of month to month finances. The only person standing in your way is you. Make the changes commit and change your life.
Financial Task this month: Review your options, make the calls, send off the emails, fill out the forms, make sure the companies you contact understand you are just exploring your options. Once you have all the information pick whatever one will benefit you and work best for you. Just know by doing any of these things you are making a commitment for the next year, 18 months, 2 years, 5 years… whatever term you agree on.
One question to always ask when refinancing or consolidating is: “Is there a penalty or charge for paying off the loan early? This one question will help you determine what company is for you.
Self-Task this month: Prioritize your life. There is this thing called minimalizing it is said that people with less have less to worry about therefore have less stress.
Now I am not living the complete minimalized life I am in the middle I can say after getting rid of a lot of square footage and 100’s of dollars in good I never used or just didn’t have the room for. My stress level has definitely decreased.
Until next month!