Homeowners want to be frugal as it’s a money-saver. When you can stretch your dollar that little bit farther, there’s no need to make additional payments. The money stays in your bank account for an emergency or a rainy day.
Usually, being frugal centers on the things which seem to make the biggest difference. Being able to buy groceries for under $50 is a skill which requires honing. The same goes for haggling. Anybody who doesn’t understand the basics of negotiating isn’t going to be able to cut costs.
One thing most people either dismiss or don’t treat with enough importance is punctuality. Paying on time plays a major role in your ability to be frugal, and not just for the obvious reasons. Yes, you will cut out the late fees and the missed payment penalties, yet that is one string to its bow. Here are the other things to look out for regarding paying on time.
Improves Credit Score
A FICO rating or a credit score of any kind is what lenders use to decide whether you’re trustworthy. Those that see you as irresponsible will not take the risk and will reject your loan application. This goes for everything from a personal loan to a credit card to a mortgage. And, once one creditor says no, the rest are bound to follow. They use the same info to make their decisions.
Being financially punctual will prevent your score from slipping in the first place. Because lenders want to know if you can keep up with the payments, they view paying on time as a positive. This counts towards everything from cell phone contracts to energy bills. On the flip side, hitting a deadline is how to increase your credit score when it hits rock bottom.
Owning nice things for a cheap rate revolves around your credit rating and that focus on your ability to meet cut-off dates.
Maintains Low-Interest Rates
You’ve got a credit card because you need a contingency plan. Plus, there are many benefits to paying with plastic. Using a credit card is a fantastic way to earn cashback and protect your purchases (the company is obliged to refund cancellations, etc.). However, the low promotional rate which you pay currently is predicated on one thing: the minimum balance.
Cardholders that don’t pay the monthly amount on time each month will lose their low rate. Once this happens, the cost of your credit card will skyrocket by up to 20%. That’s the average APR for credit cards outside of the promotions. And, switching to another company won’t be an option as your rating will take a hit.
Therefore, it’s wise to keep track of the closing date to avoid unnecessary hikes in charges. A direct debit or standing order will help as it takes the money from your account automatically.
Helps Keep Essential Services
There are some things most homeowners can’t live without today, the internet being chief among them. Not being able to surf the Web is a vulnerability from a financial standpoint as a connection makes everything cheaper. Think about the rewards and discounts you receive by paying online. You can kiss goodbye to cashback websites that give you money back on your purchases. And, there is no way to manage your money as online banking won’t be available.
Probably the worst part is the impact it will have on your career. Certain jobs and businesses require a connection to be productive. This is especially true if you are a blogger. Once your earning power decreases, so does your ability to be frugal.
Internet providers will cut off their service if the bill is late without a good reason. And, as you now know, you can’t afford for this to happen.
Cuts Out Late Fees
It’s an obvious one yet it’s well worth mentioning again. As soon as a balance is overdue, the creditor will add on a charge as a penalty. For some services, it can be as much as $30 per day until the money is paid in full including the late fees. Suddenly, bills can hit the hundreds of dollars and take a massive chunk out of your budget.
Paying on time means there is no way banks and lenders can play these dirty tricks. And, it’s not difficult to do when you set up automatic payments or create reminders. Unnecessary fees are the bane of a frugal person’s life, which is why punctuality is the key.
Do you agree or do you think other things play a more important part in frugality?