- Don't buy anything with Debt (credit) The conventional wisdom, that a lot of financial advisers teach, is not to buy anything that depreciates. While that is good advice, it certainly isn't the best advice. Good examples, that these folks tell are OK to go into debt for, are a home, investments, a business, or rental properties. Don't believe it though. By the time you pay off that debt for what was suppose to be $100,000, you have paid 2-3 times as much, depending on the interest rate that the bank/loan copany charged you. Why not, pay that money to yourself. Gain the interest on it, while it sets in your savings vehicle and then pay the $100,000 in cash? It makes much more economic sense to your bottom line.
- Establish a Budget and Follow it The only way to get out of debt is to spend less then you make. That means establishing a budget and sticking to it. Every dollar, every penny is accounted for. Even, the section in the budget that is to go into savings. Think of it as a financial plan for your day-to-day living.
- Emergency Fund Rainy Day Fund! God Only Knows Fund! Whatever you call it. It is important to have an emergency fund, for those unexpected expenses. It is important to at least have 3-6 months of wages saved. Personally, I think it would be better to save 6-12 months. Face it, people are becoming unemployed and staying unemployed for a longer period of time, so it makes since to have a bigger cushion. Granted it won't be easy, but it should be part of your plan/goals. This will also protect you from having to use credit when emergencies come up.
- Plan ahead for big ticket items This is one of the areas that many people get hung up taking out credit. Face it, when you are using credit (going into debt) to go on vacation, you haven't planned very well. Better thing is to sit down and figure out how much you will need and when and make a plan to save up for that vacation. The same is true for Christmas, I personally utilize my Credit Unions Christmas Club. A Christmas Club is a great way to set aside a few dollars out of each paycheck, so that when it comes time Christmas, you have the cash for it. And guess what, Christmas ALWAYS comes at the same time every year. The nice thing about these "Christmas Clubs," is that the financial institution will cash it out for you every year and send you a check for that amount to spend on Christmas Dinner and those gifts for your family and friends. Other things that you should save up for are Cars, new Computers, new TV's, home repairs (new roof, toilet, etc),new refrigerator, etc (basically any big ticket item that has tendency to eventually break).
- Snowball your debt payments That means stop getting new debts today! Become hyper-intense in paying off your debts. Pay the minimum payment on ll but one debt. That one debt you pay as much as possibly can on that one debt. Once it is paid off, take that same payment and add it to the next debt, until that debt is paid off. Then take the payments that you were making towards the 2nd payment and add that to the next payment, until it is paid off. Repeating these steps until all your debts are paid off.
- Get rid of the insurance No, I don't mean life, medical or dental insurance. What I am referring to is those credit life insurance plans that each of the credit card and loan companies sell you. The thing is they are way overpriced. The better option is to purchase term-life insurance through your regular insurance agent. You can usually save a lot of money, by going this route. Some have reported saving as much as $100, by doing this. However, how much you save is dependent on the cost of your term policy and how much credit you have with these rip off credit life policies attached.
These tips will eventually see you out of debt but they do require will power and organization to follow properly. If you are in debt but dont think you have what it takes to get yourself out, it might be a good idea to contact professional debt advisers, such as www.debtadvisorycentre.ie
---
go ahead share your thoughts with me now, my ears are open. I'm always eager to hear what you think.
follow me on Twitter
No comments:
Post a Comment