Save Money and Get Out of Debt
Personal debt in America is increasing at an alarming rate. Average debt per household is roughly $11,000 and will take nearly 25 years to pay off if only making minimum monthly payments. This doesn’t include a mortgage. Approximately 40% of Americans spend more than they earn and have not contributed to any type of savings plan. Many financial experts say you should save 3 to 6 months worth of your salary for any unforeseen emergencies, loss of job, illness, or other circumstances.
What? Save 3 to 6 months worth of your salary? How can you if you are living paycheck to paycheck? Waiting for your paycheck to be deposited and praying the bill you mailed out won’t bounce and be charged an overdraft fee by your bank.
You can save money and get out of debt. It is possible to regain control of your finances with the money you currently earn and avoid bankruptcy. You can improve your credit. There are options available to help you get out of debt. There are debt management services, consolidation loans, mortgage refinancing, credit counseling services, and such.
Here are some things you can do right now that will help you to save money and get relief from debt:
o Stop using those credit cards. It is easy to make purchases with credit cards, but the long term consequences can leave you with a mountain of debt taking 25 years to pay off and paying thousands of dollars in interest. o Get yourself organized and pay your bills on time. Disorganized finances and miss-placed bills lead to added charges of penalties and late fees and lower credit scores. o Cancel unwanted and unnecessary subscriptions to magazines, organizations, clubs, and other monthly memberships. The money saved from this alone can be used to pay off other debts or be used to start a savings plan, retirement plan, or college tuition. o Shop around for less expensive services. Phone, long distance, cable TV, internet access, and wireless access are all at competitive rates and provide similar and quality services. o Record all your daily expenses for a week. Identify areas where you can control your spending. Do you really need to buy a double mocha latte everyday? Try eating out once a month instead of once a week. o Consider joining a warehouse club like Sam’s Club, Costco, or BJ’s. Buying in bulk and shopping once a month can save you more money and more in gas. The membership fee will pay for itself with the savings you will get. o Begin to put aside something from your paycheck every week. A rule of thumb is to put 10% of your pay into a pre-tax retirement fund, 401k, or a savings account. If 10% is not possible, put 5%, anything you can save away. You need to start paying yourself first and start building a solid foundation for your financial freedom.
Getting out of debt and saving money is possible for you. These are simple and practical ideas you can use every day to control your spending, organize your finances, start saving a portion of your salary, and pay off your debt and gain financial freedom.
By: Kevin Michaels
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