Avoid spending money you don't have

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This is a guest post by Owen Smith, a finance writer with over 10 years of experience. The arrticle will look at 3 ways in which you can avoid spending money you don't have.

1. Chop up your credit cards

Using your credit cards to pay for things is a good way of spreading your costs - providing you can pay it off at the end of the month. However, you might find you are unable to repay your debts, and this is when they become a problem.

To avoid this problem, the simplest solution (and the best) is to chop up your credit cards. If they aren't there, you can't spend on them! If you have outstanding debts on your credit cards then try your best to repay these as soon as you can - and don't be tempted to spend any more on them. (You might want to keep one credit card for emergencies.)

As you are probably aware, credit cards come with high interest rates, so that $60 petrol you put on your credit card won't cost you $60 if you fail to repay it, it will be more like $70, and then $70 if you fail to repay it again….and so on.

2. Don't be tempted by store cards

Store cards often come with 'introductory gifts' to entice you into signing up - but don't let this tempt you, unless you are certain that you will be able to repay the outstanding balance.

Store cards are known for coming with high interest rates (higher than credit cards), and can also come with serious consequences if you fail to repay them.

The rule here is that store cards should be avoided - unless you can easily clear the balance.

3. Create a budget

Finally, to make sure you avoid spending money you don't have, you should create a budget.

Write down all the money you earn/receive each month, and then write down all the money you spend each month - this should give you an indication of how much money you will have left over after you have paid all your bills, etc. And will also give you a greater control of your finances - which should help you see if you are spending money you don't have.

If you find that you don't have enough money each month, you could look for areas where you are able to make cut backs to save yourself money.

Budgeting should let you see how much money you have available to spend each week - so you can draw this out of the bank and keep it with you, again making sure you don't spend more money than you actually have. If you find that you need to lend money short term for that car or house repair, try lending from family or consider a cheap loan before heading straight for the credit card.

Hope you have found this post useful.  If you would like to do a guest post on FrugalNYC on the subjects of NYC, Finance or Frugal Living, please send us an email.

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