We all need some basic things to survive in life. Food, shelter, water and companionship rank high on the list. In normal times, making sure we have the basics can be a challenge for many families. Now, with a pandemic affecting the world, we are seeing family budgets take a hit in these harder economic times.
Even with a good income, it can be hard to make the money stretch all month as we face higher food, fuel and housing costs. There is a lot of budget advice out there, but it’s not as simple as simply turning out the lights to save energy or cutting back on unnecessary expenditures. To truly make a difference, you have to make important changes in the budget categories that make up a significant part of your monthly expenditures. By tackling the big-ticket items, you have a chance to reduce your financial stress and improve your family’s financial future.
Reduce Your Outstanding Loan Payments and Debt
Most of us are carrying a lot of outstanding debts that we have to make payments on each month. If you want to get relief from the financial turmoil, you need to take a hard look at how to lower your monthly payments and pay off your balances more quickly. If you are a recent graduate, one of the areas you should address first is your outstanding student loans.
You should review all of your existing student loans and look at the interest rates and the payments you currently make. From there, you can come up with a plan to free up more every month by refinancing your existing balances. If you work with a private lender, you’ll be able to consolidate your current student loans into a single loan with a much lower interest rate and more affordable monthly payments.
Downsize Your Dwelling
It’s interesting how certain financial aspects are just taken as givens in our life. For instance, there is a rule of thumb that everyone should pay about a third of their monthly income on housing. When that is taken as gospel, then all of a sudden, a major portion of your money disappears on rent or the mortgage each month. Our housing costs are no longer associated with what housing should cost or could cost if we did things in a smarter way.
If you want to turn your financial future around, you should take a careful look at your housing choices and look at everything with new eyes. Instead of living in a big suburban home or renting a crazy expensive city apartment, purchase some land in the country and put a tiny home on the property. With the right planning, you can pay your debt off over 5 years and then you’ll be able to live rent-free for the next 25 years.
Lower Your Annual Utility Costs
Once you’ve tackled your student loan debt and your monthly housing costs, you can turn your sights on yet another expensive recurring cost. Utility costs are soaring across the country, and the trend will continue as more and more investors look at utilities as sources of extreme profit rather than necessities everyone needs. When you get your smaller house on your own land, you should also go off-grid.
Instead of using electricity from the local power company, you can use solar and wind energy. A composting toilet will eliminate the need for a costly septic system. You can drill a solar powered well for water, or set up a water catchment system.