Times have become tougher nowadays. The economy has not been stable for quite awhile. We hear about so many companies going bankrupt or being bought by a bigger company. Some stores closing down since they have been in the red for a long time already. Some people are in debt up to their necks with their mortgages, car loans, credit card bills and utility bills. Some people are turning to “easy money” from loan sharks just to make sure that they have something to spend and make ends meet.
It has always been people’s habit to splurge when they have extra money either from a bonus or a tax refund. People would always feel that since they worked hard for that money, then they have all the right to spend some of it to treat themselves either in a spa, party, a trip abroad, or a new dress or suit, or a new pair of shoes, or a new car or jewelry. It is a person’s way to compensate himself for all the hard work that he has done.
This is surely good to hear and enjoyable to go through however, this could lead you to overspend and to be in debt even more. In these tough times incurring more debts is a grave mistake since the banks’ interest rates have been increasing tremendously.
There are several ways that you can do in making smart decisions when you have or need extra money. Let us say that you were lucky enough to find a hundred dollar bill lying on the street. So many people have passed by the street but no one noticed this bill lying around but you. This is no hard earned money. This is merely and purely luck and timing kind of money.
So what do you do with it aside from splurge it on something you don’t really need?
Pay your other debts
If you have other bills or debts to pay, then use this money to pay those. If your friend loaned you some money last week, then pay that off too. Chop off whatever amount you can from the debts that you owe – credit cards, mortgage, car loan, mobile phone bill, utility bill, etc. This could be very helpful since you would have to pay a lesser amount come the due date. Make sure that your debts are all paid off immediately since it is really frustrating and stressful to have debts in mind. It can be very daunting to have debts in mind.
Put it in your savings
If you have a savings account, then deposit that lucky money and save it for a rainy day. If you don’t have a savings account yet, then this is the best time you open one, You will never know when you will need that money in the future so it would be wiser to put it in your savings account first. Moreover, if you put in a savings account, then it can incur interest and your money can even double in a certain period of time.
You may have financial goals that you have been planning like a college fund for your son, or a new car in the next five years or maybe a future mortgage or a retirement fund. This extra money that you have today can be used for that.