Categories
Debt Management

10 Money Management Tricks To Be Debt Free And Save Money In Life

The understanding of money management is important for everyone. It’s not always true that only business owners should learn money management. It is equally important for people who live paycheck to paycheck. If you’re not good with money, then you may accumulate a large amount of debt. And debt is not good for your personal financial health. You can’t be able to manage mandatory living cost. Moreover, you will not be able to save money for your financial future.

But, the question is how can you manage your money to avoid debt and save for the future?

At first, take a look at the ways in which you can pay off your existing debts.

Analyze how much debt you are in and take action accordingly

You have to analyze your debts so that you can take the proper action to get rid of them. If you’re not sure how to fight with your current debts, then take help from an expert or try to gain more knowledge on debt repayment. To avoid further debts, you must maintain a track of the due dates on the various loans, the interest rates and the principal amount owed. This way you can be sure of the outstanding amount. It can be easier for you to become debt free fast.

Choose the right debt repayment strategy to get out of debt

To get out of debt, you have to pick the right debt repayment option. There are many debt repayment options available. You can become debt free on your own or you can take professional help. No matter what option you choose, you need to stick to the strategy to get out of debt as soon as possible.

Debt repayment strategies that you can manage on your own

At first, I would like to introduce you with some do-it-yourself debt repayment strategy that you can manage on your own.

  • Debt snowball method

You can follow the debt snowball method to pay off your multiple credit card debts easily. Let me explain the debt snowball method first.

In the debt snowball method, you need to arrange all your debts from smallest to largest order. After that, you need to make larger payments to the smallest debt while making minimum payments to the rest of the debts.

After paying off the smallest debt, you have to target the second smallest debt. Make sure you pay the minimum to the other debts while paying larger to the target debt. Follow the method until all the debts get paid off.

  • Debt avalanche method

If your income is good, then you can follow the debt avalanche method to get out of debt. In debt avalanche method, you need to target the highest interest rate debt first. Start making larger payments to the highest interest rate debt while paying the minimum to the rest of the debts. Once the highest one is paid off, target the second highest interest rate debt. Follow the same method until all the debts are paid off.

  • Take out a consolidation loan

If you can’t understand the debt snowball or debt avalanche method, then you can consolidate your debt. Take out a consolidation loan to pay off all your debts. However, you have to pay off the new consolidation loan on time. Don’t forget to make the monthly payments on your new loan.

Professional debt repayment strategies that you can consider to pay off debts

You can also seek professional debt relief help to be a debt-free person. However, for that, you need to choose an authentic company who gives debt relief services.

  • Seek debt counseling session

If you are not sure where to start, you can also consider credit /debt counseling session to get an idea of proper debt relief option. The debt counselor will also help you to understand better money management tricks.

  • Debt consolidation program

Once you enroll in a debt consolidation program, the company will contact your creditors to negotiate to reduce the interest rate of your debts. Your multiple debts payments will be merged into one single monthly payments.

  • Debt settlement program

If you are unable to pay off the whole debt, then debt settlement can be the good option for you. In debt settlement, your total debt amount will be reduced. The company will negotiate with your creditors to reduce the total debt.

Note: Paying off debts is not enough, you have to stay away from future debts. To do so, you have to learn some money management tricks. It will help you to save money as well.

Here you go:

Start following a budget

To avoid further debts and to save money, you need to assess your present financial situation. Take a pen and paper and write down your monthly expenses. Look through and evaluate your bank statements, credit card bills, household cost, and other unsecured bills so that you can find out the total amount you have to pay every month. It will help you to pay off your monthly obligations on time and to avoid further debts.

Think twice and judge each spending

Before each purchase, think whether or not the item is your need. It is important to spend money on need instead of wants. Thus, you’ll be able to stay away from debts in the near future. Since the monthly expenses can expand over a huge variety of items, it is quite natural that you may spend impulsively on items that are not necessary for you to buy. Thus, you should cut down on luxury and unnecessary items to curb these expenses.

Reduce the usage of credit cards

Remember, using multiple credit cards is not enough, you have to pay the bills in full and within the stipulated time. If you don’t pay the bills is full, you will start accumulating interest rate. One day you will fall into the vicious cycle of debt. So, you should use your credit cards very carefully. Use a credit card only when you can afford the cost. Use it and pay the bill within the time. Use cash as much as possible to avoid accumulating credit card bills.

Curb unnecessary expenses

To pay off debts and to avoid further debts, you have to cut down unnecessary expenses. Remember, you have to make all your monthly payments on time. To do so, you need to have enough money in hand. If you spend all the money once you get the paycheck in hand, you can’t make payments on your monthly obligations. So, revisit your budget to cut down on the extra cost to that you can free up some money. Having enough money not only helps to make monthly payments but also helps to secure your financial future.

Set up an emergency fund

Creating an emergency fund is necessary to avoid further debts. Emergencies are uncertain; they can come at any time. So, you have to be prepared for that. If you don’t have enough money in an emergency fund, then you have to swipe your credit card or take out a payday loan to manage the situation, which is a wrong practice. Once you have enough money in an emergency fund, you can easily use that to get out of the situation without inviting debts in life.

Note: Save at least 3-6 months of savings in an emergency fund to avoid surprising debts in your life.

Automate your savings

Many baby boomers are in debt due to lack of savings. They are unable to enjoy their retirement due to the debt burden. You have to save enough money to secure your financial future. Otherwise, you may have to lengthen your working life. If you want to retire at the right age, start savings today. Set aside at least 20% of your monthly income. Also, open a retirement account to save money for your retirement, so that you can avoid debt in your golden age. Automate your savings to avoid losing money on unnecessary things. You can set up automatic savings with the help of your bank where you have a savings account.

Reward yourself

Living within your means plays a big role in managing money. But it doesn’t mean you have to deprive yourself. You can still spend money on the thing that you want after paying your monthly obligations. You just need to plan your money properly. Set aside a portion of your income every month for guilt-free spending. Reward yourself; it helps to stay focused on your money management goal.

Note: You can open a bank account where you can save money for planning a vacation, enjoying the New Year party, and purchasing a big ticket item.

Lastly, the main thing that you always remember is, pay bills on time. It will help you to avoid debt and save money. Another thing is, due to the lack of proper insurance coverage, many people often lose money. So, you must safeguard your money by taking proper insurances coverage. I hope these money management tips help you to avoid debt and save money.

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Debt Management

Ways to Get Out of Debts

Panic-stricken faces, reluctance to spend even on essential commodities, high stress, and pressure levels, getting annoyed even at the slightest chance are not just signs of depression but also of a person in deep debts. Well, the way out of it very simple pay them all.

The happiness of a person paying the last installment of his loan is equivalent to that of a person who has become a father. You feel your shoulders light and mind stress-free. Imagine what will be your state of mind when you have to get into another loan to manage an urgent need? This will be a nightmare and depressing experience. So if I tell you that, there is a way to get out of debts and continue to be the same for the rest of your life, won’t you be related?

Here are five ways to get out of debts

1. Plan your savings

I start with the most sort after and preferred solution to get out of debts, savings plans. Well, this is the easiest way to get out of debts. Using your money from savings to spend on life events and emergencies instead of taking a chunk from your monthly paycheque. There are a lot of short term and long term investment plans available for you to scrutinize and embark on. Once you decide on the plan, decide on the savings and then proceed to save it on a monthly basis.

Discipline is very important when you start your savings plan, no matter what the amount allocated for the savings should not be used for any other purposes. The amount saved should be used only for your goal when you can save from those savings to start the cycle again to earn better monetary benefits.

2. Record your mistakes

Nobody likes to time travel to visit the mistakes made in life. But I am not going to ask you to time travel but create a documentary about various financial mistakes you have made or make an entry into your diary whenever you make a mistake. This will help you in two ways:

1. It will protect you from committing the same mistake twice.

2. It can also be used to bail you out of precarious situations simply to help you in finding a way to get out of debt troubles.

3. Secondary income

The best way to increase your cash flow and to save more money is to create a source of secondary income. Choose your secondary income source based on your passion. For example, if you are passionate about writing, then you can choose content development, article writing as a secondary profession. Writing can be done from home and it will also quench your passion. It will also help you as a stress buster and when money starts to come in from the secondary income you can breathe a lot easier than you were before.

When you choose a secondary income source, make sure it is not stressful and laborious. You already have your primary job to get stressed and overwork. So take a lot of care when you choose your secondary income source.

4. Invest your way to the top

A business needs assets to increase its valuation similarly a person needs investments to increase his standard of living. Right investment at the right time in the right place will yield you right results. The easiest way out of debts is to climb the ladder of investments. Plan your investment mix correctly. Investments to aid you during your retirements should be the first and foremost investment you make.

DCA provides a lot of investments, 529 plan which is tax-free can also be chosen to make investments. These may come to your aid when you need them to.

5. Battle against boredom

A study says people tend to spend more when you are bored. The best way to put it is

“An ideal mind is a devil’s workshop”

It is always better to keep yourself engaged in some activities. When can you be active by paying the least amount of fees why not? You tend to splurge money when you a bored and you start to purchase something to kill time. For example, you may decide to purchase Xbox to kill time until your girl returns from work. Instead, you can choose activities like jogging, badminton which are comparatively cheap to kill your time. You can enjoy the twin benefits of fitness and stress relief.

Summing up:

To live with or without a debt is in your hands. It is always better to live a life without any financial burden. This is life without a financial burden is not impossible but is possible with little planning and wise decisions. Decisions for a lifetime after all we are not going to be working all our lives when we decide to hang our boots make sure you hang it with pride and without any regrets.

Categories
Debt Management

Things You Should Know About Debt Management

Have you ever wondered how you get into debts?

Debt is something which, none of us would want to entertain in our lives. But sooner or later, we do get into debts and sometimes it takes years to clear it off. We all think that we have control over our money, but the fact is our mind is manipulated every moment towards spending money. Before you even realize it, you would have spent it on something unwanted. And the debts get added. If you follow a proper debt management plan, you will not only be able to clear your debts plus you will know to avoid getting into debts.

What is debt management?

First of all, you need to know what debt management is and how it can help you. List down the debts based on the interest rates. Start clearing off the ones with higher interest rates. If you find it difficult to clear off debts with the existing financial situation then you can look for debt management plans. There are various companies that offer debt management plans and you can choose based on your needs. The first essential thing to do is not falling into further new debts until you clear all the existing debts.

There are quite a few things that you need to know before you can plan on debt management.

The marketing strategy:

A research says that the turnover of media advertising industry was 207 billion U.S dollars in 2017, which is the result of you and other customers who fall as prey of the marketing strategy.

People in the fields of marketing, sales or advertising know it better to make you spend your money on the things which you might not need even. Call it the marketing strategy or your hopping mind which gets tempted to buy things – everything adds up to debts and tons of debts!

Installments add up to become debts!

You do all the research for a home, and finally found your dream home- a place of your choice with all the things as you wished, but wait the cost of it is beyond your affordable limit. The cloud of disappointment surrounds you, and then a friendly salesperson comes and shows the path. He explains how the huge amount can be broken into small monthly installments to be paid in a few years and it won’t pinch your budget as well. You might just notice the short-cut that leads to your dream home and not the debt that is going to be with you till you retire or maybe longer. Meanwhile, you need to look for a way to save for retirement as well. A house or property out of your affordable limit will leave you with debts for a lifetime and make it difficult to plan your savings.

By knowing the debt management technique, you will be able to organize your finances well. You can avoid such scenarios by fixing a workable budget before you look for a house. This will also help you to evaluate your debts, clear it off and how you can progress towards a savings plan.

The comparison trap!

Why can’t I go for nice cars, big home etc. which other people have?

I can easily get those by paying small monthly installments over a period of months and years. But, what about savings? Others would have saved for it and bought, you might not know the details.

Don’t fall into the trap of comparing with others and end up buying something which you might regret for years. Paying 4 to 5 small installments every month can seem like a burden in the long run. Especially, when there is a financial emergency, you are all stuck in debts and left with no money.

The savings strategy:

If you still want to buy things out of your affordable limit, then start saving for it. There are lots of ways in which you can get started with savings:

• Start with saving in banks that offer better interest rates.

• Look for ways to invest your money.

Create a short-term or long-term financial goal:

A short-term goal can be a down payment for a car. A long-term goal can be a down payment for your dream home. This will surely reduce your burden of debts. Once you have saved a good amount, the installments may be paid off in a short span. You can even start saving once you clear your monthly installments.

Summing up:

Getting into debts is very easy but getting out of it will take huge efforts and time. You need to manage your finance wisely or else you will end up in trouble. Through debt management, you will be able to learn to balance between your debts and savings.