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Once upon a time, as a young newly wed managing a household for the first time, I made a lot of mistakes, as young people are wont to, mistakes that I have paid dearly for, and am still paying for until this day. Financial mistakes. That are affecting our finances still now.
What was this mistake?
Thinking that frugal living was enough to be in a good place financially. That all I needed to do was shop sales, comparison shop, stockpile, etc... and all would be well and fine in our family's finances.
We were doing ok, I guess, spending exactly the amount of money we had each month, and no more...
But we weren't putting aside any money each month for savings. We had no backup money, no extra cash, since we spent everything that we brought in.
And then, what do you know, surprise surprise, a long forgotten bill from many years up came up and bit us in the behind, necessitating us to fork over a very very very huge sum of money (nearly an entire month’s salary) in one lump sum, or have to deal with a long expensive drawn out court case...
That’s when we got into the red.
It took a whole long time to get out of the red, but kept slipping back in, then out, again and again.
The downward spiral we got into financially, with bank loans and otherwise, all started because of 2 stupid mistakes.
One- forgetting about a small bill until years later when interest piled on. (Ahem. That wasn’t my bill, it was from before we got married....)
Two- (and this one I do take responsibility for) spending all the money we brought in each month, and assuming that just “being frugal” was enough. What we should have done was look at our income, decide how much money we had to spend and how much we should put aside each month into savings as an emergency fund. The money available to spend should have been budgeted into different categories, and only that much should have been spent in each category, using the various frugal tricks up my sleeve to stick to the budget.
Getting out of the rut of debt is really hard- when you already have debt it’s tempting to say “Oh heck, what’s the big deal with a few more dollars of debt” and then it grows and grows and grows.
Using credit cards, especially when income is low, can often cause people to forget exactly how much money they have to spend each month, and they end up spending more money than they have.
Visa Prepaid Cards can help prevent this- you only can spend as much money as you put on the card, and you aren’t able to build up debt. See here how you can start using and fill up your Visa Prepaid card.