Sometimes it's easier to take debt reduction advice from someone who's been in that hole and climbed out. Meet Clarky Davis, The Debt Diva at Care One Services, a debt relief service. Davis offers real world financial advice for making your budget fashionable. In fact, her mantra is "frugal is the new black".
So how do you have the things you want and a fat savings account, too? LoveToKnow Save asks The Debt Diva to dish it out.
Debt Reduction: The Debt Diva Interview
You say part of your experience with debt reduction is personal. Share one of your darkest credit secrets, and how you managed to climb back on top.
My biggest money mistake was racking up about $7,000-$8,000 in credit card debt when I was in my mid-to-late 20s, and I had no money saved for an emergency! I had a good job and an apartment, but I went out every weekend and spent money on food, drinks, and clothes - all the frivolous stuff girls like. I also had a couple of bump-ups with my car, and I charged the repairs because I had no money saved up.
It took me 2-1/2 years to pay the card off! I completely changed my lifestyle in that I no longer shop as a social activity. I cut back on my restaurant spending and evenings out with the girls. I found cheaper activities that were just as fun as a way to spend time with my friends.
Since then, I have become vigilant in sharing my story! Everyone should build an emergency savings account and keep their credit card balance in check.
Debit cards may be convenient, too, but do people run into trouble with them because the balance isn't right in front of them, like in a check register?
Debit cards can be tricky if people are not careful about regularly checking their balance and tracking their purchases.
Some people want to save, but then ask themselves, "What am I saving for? Why not just buy what I want now?" What's your advice?
Because of those nasty little interest charges tacked onto any purchase you make with a credit card, you will spend more money on an item if you charge it than if you save and pay in cash! Saving ahead also prevents you from the dreaded impulse buy! While you're saving, you have time to consider if the item is something you really want and not just a spur of the moment purchase.
Stick to a Spending Plan
In your experience, what's the biggest mistake people make: spending too much, or spending without thinking? How can they change their approach?
It's a little bit of both. If you aren't careful and don't stick to a spending plan, then you'll totally blow your budget. You have to make a serious effort to change your spending habits.
I suggest that everyone should take one or two weeks to intensely monitor their spending. It's always good to re-examine your spending habits during the year and look for leaks in your budget. Then consider opportunities to cut back on your expenses. Do you really need the best cable TV package? Can you purchase your produce at the farmer' market instead of the grocery stores? Or use more generic brands?
Your new mission is to spread the message that "Frugal is the New Black". Tell us a little about that.
The past several years, Americans have been on a spending spree. There's been overwhelming consumption and very little saving. People are starting to realize, to their detriment, that their eyes have been bigger than their wallets. They're starting to recognize that being financially secure is more important than the instant gratification of constant, unchecked spending.
What consumers need to realize is that living stylishly within your means is empowering! Sticking to a spending plan doesn't mean banning fun.
Frugality is a lot like the green initiative, which encourages people to live a more environmentally-friendly lifestyle. Frugal living encourages consumers to live a more financially-secure lifestyle.
Shop Like The Debt Diva
Since many people love to shop for clothes, share the four main methods by which people can stay "fashionably frugal".
- When I see an outfit I really covet in the store, I stalk it. I check back every week or so to see if it is on sale, and if the store still has my size. I'll visit the retailer's website to see if they are offering any online specials. I never, ever pay full price.
- I'm a huge fan of designer clothes, but I can't afford those crazy prices. I love that stores like Target are signing with trendy designers to create looks for less. Check out Isaac Mizrahi there. Bitten by Sarah Jessica Parker can be found at Dave and Barry's, and even Vera Wang is designing for Kohl's.
- Visit discounters like Stein Mart, T.J. Maxx and Marshalls. They have a good selection of career and casual clothes for much less than department store prices. Sign up for their customer cards to be notified of special sales not always open to the public that give you a sneak peek at sale prices or an extra discount.
- When you're shopping for clothes, don't buy something just because it is on sale. Make sure it works with your wardrobe or you'll end up with a closet full of odds and ends that represent wasted cash.
If you were a superhero, what would you conquer?
Impulse buying and interest rates!