One common way that people get into financial trouble is by signing up for a bunch of small recurring financial commitments. Cell phones, internet service, Netflix, cable television, music and video clubs, and fitness centers are all examples of things that require recurring payment. I’m not saying that these things are bad, but you need to think long and hard before commiting to monthly payments.
One good way to keep your spending in check is to look at recurring expenses from the standpoint of what they cost for an entire year. $60 per month for cable television may not seem like much, but $720 per year puts it into better perspective. An $80 per month cell phone plan might seem like a good deal, but $960 per year for a mobile phone seems a little more expensive.
Remember, it isn’t that these are bad deals, but you want to make sure you are tricking yourself into making poor decisions by not seeing the expense as a whole. By avoiding unnecessary recurring expenses, you can keep your spending in check and free up financial resources to use for savings or paying off debt.
Comments on this entry are closed.