Editor’s Note: I’m pleased to introduce Andrea Woroch to The Heavy Purse. Andrea is a nationally-recognized consumer and money-saving expert who has appeared on NBC’s Today Show, Good Morning America, FOX & Friends and many other programs.
Detoxing is all the rage right now, with celebrities and consumers alike looking for the next best thing to flush out their systems and get healthy. While a detox is most often associated with the body, it can also be used to purify your finances. If you often find yourself wondering where all your money went or are struggling to climb out of credit card debt, it’s time to flush the toxins from your spending habits and achieve financial well-being.
Figuring out how to get started is sometimes the most difficult part. That’s why I put together these 8 steps towards a complete spending cleanse so you can finally get your money in tip-top shape.
Detoxing isn’t easy, which is why setting a specific goal is a crucial first step. Whether you want to dig out of student loan debt, pay down your mortgage faster or become a more conscious consumer, write down your goal and put it somewhere visible. Otherwise, depraving yourself of fancy dinners or a new pair of shoes will start to feel meaningless and you’ll slide right back into those unhealthy spending habits.
Commit to a spending fast and don’t buy anything that doesn’t qualify as a necessity (food, fuel and bills). Do this for a few days, or for those up to a bigger challenge, 30 days! While helping boost your cash flow and eliminating money waste, you’ll break bad habits and learn what you can live without to ultimately revitalize your budget. Make the pledge via social media so friends and family can hold you accountable, or attach a sticky note to your credit cards for a quick reminder when you feel an urge to splurge. If you need further encouragement, download Coach.Me to get advice, motivation and prompting from the user community.
With any lifestyle change, it’s easy to fall back into your old ways if you don’t fix the root of the problem. Identify the triggers that cause you to spend so you don’t rack up debt, blow through your savings or inflate your monthly budget all over again. Maintaining healthy spending habits is the key to financial well-being, and powering through moments of weakness will only make you stronger!
Carrying credit card debt is the most harmful impurity for your financial health and the biggest issue holding you back from reaching future goals. Begin flushing out debt by making double or triple the minimum payments due on each card. This will be easier after you reduce budget bloat as you’ll have more money to put toward these debts. Focus your energy on paying down the card with the highest APR to save more money on interest fees over time. Both the ReadyForZero and PayOffDebt apps will track your progress and help you visualize your success so you stay motivated.
Staying on track is key to getting the best results from your detox, so monitor your progress with tech tools like Mint which links all your financial accounts and provides an overview of your spending and savings in one place. Doing so will help you make better purchasing decisions and stay motivated to stick to your ultimate goal. Start your day by reviewing your accounts to see where your money is going and when it’s coming in.
Hydrating your savings, whether for the “what if’s” or those planned purchases, will contribute to the overall lifestyle change that you’re looking to achieve with this financial detox. Keep in mind, preparing for retirement and unexpected life circumstances is crucial for you and your family’s wellbeing. Use a portion of the funds you’re no longer wasting to build up your emergency fund, contribute a bit more to retirement or establish a college fund for your kids. Boost those savings by setting up weekly automatic transfers and put away money you may have otherwise spent on impulse purchases to a separate account.
Adding greens to your diet isn’t just important for your body: your bank account will benefit, too! Reducing your spending is one way to save money, but making more cash is the best way to quickly reduce debts and reach financial goals. Look for income-boosting opportunities based on your skill set. If you’re handy, sign up for a service like TaskRabbit to help people fix or build things. If you enjoy writing, find freelancing opportunities through eLance or other providers. Ultimately, find out what you can accomplish in your free time and look for ways to monetize it.
You can only limit spending so far. There are expenses and purchases you can’t avoid, but taking the time to find savings for every transaction will eventually become a habit. Always look for used options first, whether shopping for a car, appliance, electronics or even clothes. When it comes to everyday items, turn mobile shopping apps like CouponSherpa to search for in-store savings and ShopSavvy for instant price comparison so you never miss a deal.
Once you reach your goal, it’s important to maintain a healthy spending lifestyle so you don’t fall back into the same financial traps. Don’t start living large just because you’ve received a boost in income or finally paid down those credit cards. Stick to your rigid budget and keep your long-term goals in site so you don’t lose focus.
Editor’s Note: Thank you for sharing your tips with us, Andrea. Now is a great time for everyone to take a step back and assess whether they could use a spending detox. It’s very easy to get a little lax with our spending, especially during the summer, so I encourage everyone to give themselves a quick financial check-up to make sure you are still on track.
Andrea Woroch is a nationally-recognized consumer and money-saving expert who helps consumers find simple solutions to their financial woes while influencing healthier spending and saving habits. Connect with Andrea at www.AndreaWoroch.com and follow her on Twitter and Facebook.
SHANNON RYAN, CFP®
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