Hi Money Minder,
Hey there, I’m in a bit of a financial pickle. I recently landed a new job that pays more than my last one, but I have a terrible habit of not saving money. This means whenever unexpected expenses pop up, I end up borrowing money or using credit cards, only to get stuck in a cycle of debt.
I’ve come up with a plan to make biweekly payments of $100 towards my debts and outstanding loans. On top of that, I’m going to pick up extra shifts to bring in some more cash. After paying all my bills, I should be able to save $900 biweekly and live off $260 a week for essentials like gas, groceries, and toiletries. This way, I hope to build up my savings quickly. Plus, I know I’ll need a new vehicle soon and will have student loans to start paying off in about a year.
I know most people advise tackling debt first, but in my case, I always end up borrowing money back because I don’t have any savings to fall back on.
Thanks for any advice you can provide!
Warm regards,
Financially Focused Guy
Response from THE MONEY MINDER:
Hello There,
Congratulations on your new job and the raise! It’s great to hear that you are taking proactive steps to manage your finances and break the cycle of accumulating debt. It’s important to recognize that you’ve identified a pattern that hasn’t been working for you in the past, and you’re making a plan to change that.
Setting up biweekly payments to pay off your debts is a solid strategy. By committing a specific amount regularly, you’re creating a structure that can help you stay on track. Additionally, your decision to allocate a fixed amount for living expenses and saving after paying off your bills shows financial discipline and foresight.
While it’s understandable that you anticipate needing a new vehicle and having student loans to pay off in the future, it’s crucial to prioritize building an emergency fund before taking on new debt. Having savings set aside for unexpected expenses will help prevent you from relying on credit cards or borrowing money in the future.
I would suggest considering automating your savings by setting up automatic transfers to a separate savings account. This will ensure that you consistently save a portion of your income without having to manually allocate funds each time. Keeping track of your expenses and following a budget can also help you stay within your means and avoid overspending.
Remember, it’s all about finding a balance between paying off debt, saving for the future, and covering your current expenses. Stay committed to your plan, adjust as needed, and remember that small steps add up over time. All the best from THE MONEY MINDER.
