TLC has a brand new 'reality' show which involves a new movement in consumerism called "Extreme Couponing". Extreme couponing has grown in popularity over the past few years and it has been the topic of discussion for many who are struggling with their financial situation.
Bloggers are now flooding all of the social media sites with tips and tricks to save on disposable household products. Extreme couponing has become so popular that seminars are being hosted by self proclaimed couponing gurus. The process of extreme couponing is not for anyone, as well it may require too much preparation and planning. This may not be worth the savings for all the personal and professional time it requires.
For those who want to save money in the long run where is the best place to start?
So if one can not better their situation from stocking their bomb shelter with 100 bottles of Windex, what is the best way to go?
Consumer debt is mostly accumulated when there is more month left after all the money is spent. Fixed expenses are almost always paid on schedule, thus leaving the individual to manage their finances to afford their variable expenses.
Fixed expenses include: mortgage/ rent, car payments, insurance premiums (life, medical/dental, home, auto, etc), interest payments on consumer debt, any contractual monthly payment (cell phone, furniture financing, gym memberships, etc), as well pre-authorized withdrawals for savings or any other transaction.
Variable expenses essentially are everything else that changes from month to month, such as: fuel consumption, groceries, savings contributions, entertainment costs, clothing/toiletries and other vices that one might have.
Some variable expenses can be controlled whereas others are almost impossible to change (cost of gas rising raises cost of fuel consumption, price of produce increases thus making ones monthly food staple more expensive, etc). Therefore, it is important to look at your fixed expenses and assess if there is enough money left over to afford your variable expenses. If you find that your fixed expenses take up the majority of your disposable income, you may want to consider where you can reduce your fixed monthly expenses.
With a dominate allocation to fixed expenses the risk of increasing consumer is high, especially when an unforeseen expenditure occurs (i.e. car repair, medical expense, etc) as well it becomes more difficult to eliminate that debt since your future disposable income is mostly spoken for. Furthermore, when financing an unforeseen expenditure with credit you still have variable expenses that you need to buy each month; therefore, review your monthly expenses and create a plan to make your monthly budget more flexible to afford the unknown variables.
If you don't have much breathing room to make changes, then look into starting an emergency account and a side savings account to afford your expenses when an emergency occurs. Speak with a qualified financial professional to help assess the affordability of your assets (home, auto, contribution to your savings, etc), and be aware of the risks of leveraging equity as a bail out. You may have to ask yourself the hard questions: can I afford the home I live in? do I really need to a new car or can I survive with a second hand vehicle?
The wealthy do not become wealthy by tying up their disposable income in non-revenue generating assets. Be aware of your financial situation and make changes if it is constantly causing you to rely on your credit card each month.