Times are tough, your money has to stretch even further, so do you pay off debt or save your money?

If you are having to make your money go further and further, the idea of saving may now be a distant memory or idea.  But you need to save something to weather the storms life can throw at us or you can end up in a cycle of credit.Credit Card ConsolidationCredit: morguefile.com

Maybe you have been in a “constant storm” with your money running out before your next pay check, and life just getting busier and busier as you have to work harder to make ends meet.  But if you can take the time now, and get some control, you can then make better decisions with the money you earn, and maybe just maybe get to put some back in your pocket.

You need to carve out some time, even an afternoon a week, or even an hour at night once a week, just setup some kind of routine and an area where you can work and get all your bills, statements and pay stubs out without losing them. 

Systematic Savings - In answer to the question “pay off debt or save?” you need to do a bit of both.  So the best way to get things organized and started is to set up a routine and a systematic savings routine with your bank.  If you can shave off even a few dollars each pay and have it automatically transferred to a savings account that is difficult to get at ie; not through the ATM machines, this would be the perfect start.How to Pay Off Credit Card Debit FastCredit: morguefile.com

You would be surprised how quickly you will get used to those few dollars missing.  Once they are out of site, then you know just how much you have to work with.

If your debts consist of credit card debt, then you need to work with these next.  Now that you have your few dollars (5% of your take home pay would be perfect, but start with 1% if need be or whatever you can afford, as you get used to this you can always raise it!) .

Try and find ways to cut down all the minimum payments, either by combining your cards onto the lowest interest one, or calling your card company to negotiate a better rate. 

Just taking a closer look at your spending habits on these cards is a great way to find places to shave some spending.  Most credit cards now have very detailed statements, so you know exactly where you are spending your money. 

Go through your expenses and see if you can shave some spending.  Could you car pool with someone to save on fuel? Can you cut back on take-out meals?  Once you have been through your credit card spending, start looking at other bills in your household.

Could you cut back on groceries, by purchasing less packaged goods?  Many times, pre-planning some simple meals and recipes on the weekend for the rest of the week, can help to lower your grocery bill.  A big batch of chili that can be for 2 meals for example.

Bundle Services – Take a look at your phones, cell phones, internet, cable etc, and see if you can get them onto “one bill”  Many companies will offer a discount if they are on one bill.  Take a look at your cell phone plan, are you getting the best deal you can?.

Take a look at every bill and see if there is something you can do to shave a few dollars here and a few dollars there.  If you can manage to squeeze out some extra money per month, then you can apply this to your debt.

You already started your savings plan, and this will be for emergencies only, not for getting your hair done or that sale at the mall.  You get this set up as an automatic payment just like it was a bill payment such as your rent or mortgage.

Most banks will set this up for you.  Start with a small amount so you don’t feel the pinch as much and as you get your expenses under control, you can then raise that amount that is being transferred to savings.   If you are lucky enough to get a raise or extra hours at work, you can take this extra money and save it too. 

Before you know it your automatic savings will begin to grow.  Slowly at first, but it will go quicker as you pay off bills.Cheap Credit Card Debt Consolidation LoansCredit: morguefile.com

Paying off debt is important but so is saving for a rainy day, emergencies or that family vacation you want to take in a couple of years.

Automatic Savings Plan - By getting an automatic savings plan set up first, you will know just how much money you have to work with.  The saying “out of sight out of mind” works well in this scenario!  If you say you are going to save 20 dollars a pay for example, if you leave it where you can get it, it has a nasty way of getting spent.  But if it is transferred right away, then you will learn to live without it.

So, then take the rest of your expenses and shave something off them the best way you can, and then your pay check will go further.  By looking at your statements closer, you may notice things that many people don’t.  Credit Card Debt Consolidation LoansCredit: morguefile.com

Over limit Fee – This is when a you are at your max on your credit card, but the company let you go over the limit and charges you for it.  Even if you just went over by 5 dollars, there will be at least a 25 dollar over limit fee, which is then added to your minimum payment.

So, there is 25 dollars or more a month going out the door for nothing.  Things like that can happen easily, especially if you don’t take the time to really look at your statements.

Bank Fees – It is worth sitting down with your bank to discuss packages for the fees.  If you use the ATM a lot, you may be getting charged fees.  Many banks offer packages for fees and services, make sure you get one that suits your life style.

The above are just ideas for cutting back and ways to save money painlessly.  You don’t have to be sitting in the dark eating mac and cheese to cut back.  Simply invest at least an hour a week into where your money is going then see if you can plug a few holes, and get back in control of your financial health.  Knowledge is everything.  So, then when you ask yourself the question should I pay off debt or save, you can say yes I can do both.