Make Proper Financial Planning To Avoid Debt

You may be tired of getting into credit card debts and wish to put and end to this scenario. Considering various debt solutions such as credit card consolidation or settlement can provide you with debt relief. However, in order to actually address the problem you have to consider proper financial planning. This will help you not only in getting out of debt but also in staying out of it.

Some of the things that you should take into consideration when planning your finances are as follows.

Avoid Debt

1) Formulating a budget

It is very essential for you to formulate a budget that includes all your expenses. It should also have your total income calculated. After you get your total income and expenditure you are to subtract the total expenditure from the total income, the amount that is left behind is the total amount that you can make use of in order to pay off your debts. When you formulate a budget, you are to record all your expenses in proper categories. This will give you a clear picture of how much you want to and how much you are spending and where you are spending it. This helps in putting a check on your expenditure. You will also get to know the areas where you need to reduce the amount that you spend. Thus, a budget helps you develop an overall healthy financial life.

 

2) Setting up a debt repayment plan

When you are facing credit card debts, then it is essential that you have a proper debt repayment plan to help you out and keep you motivated throughout the process of debt reduction. You must try and make the minimum payments in case of all your debts and try to pay more than the minimum in case of the debts that have a higher rate of interest. In such a situation you will pay off the highest interest rate card debt and will be left with paying towards lesser number of cards. You will save a lot on interest also, as you will not stretch the loan over a long period of time.

3) Buying insurance

If you want to avoid debts, then you must buy insurance that provides adequate coverage. Insurance is a bond that protects you financially from any unforeseen situations. If you are not protected, then you will be paying for all such situations yourself. This could lead to falling into debt as you will tend to use your credit card to pay for the emergency. For example if you have medical insurance and you fall sick, then all your medical expenses will be covered. However, if you do not have insurance you will have to pay for this yourself, thus leading to debt. To avoid such a situation buy adequate polices that provide you with proper coverage.

These are a few ways in which you can avoid credit card debts and live a financially healthy life.

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How to Get Out of Credit Card Debt

Credit card debt can drag you down and prevent you from living a better life. Many people do not have debt on just one credit card but rather several. This debt may be combined with other forms of debt such as student loans, car loans, personal loans, and a home mortgage to weigh down a person’s budget. Credit card debt, however, generally has a higher interest rate imposed on it than other forms of debt, and interest rates in excess of 20% are common. Some people who carry high balances on their credit cards pay several hundred dollars per month in interest alone to their credit card companies. Because of this, many people who want to get out of debt do opt to begin paying off their credit cards first.

Credit Card Debt

Find Extra Cash

In order to pay off credit card debt in the fastest way possible, you do want to put as much money as you can towards your monthly credit card payments. Taking time to analyze your budget and cut back on expenses is a first step towards paying this high interest debt off. The more money you can free up now equates to less time overall to pay your debts off. So consider eliminating cable TV, cutting off your home phone service, avoiding eating at restaurants, and more. Your goal should be to live below your means. This can be tough to do, but once your debts are paid off, you can consider adding back some of those luxuries that need to be cut today.

 

Target One Debt At a Time

If you have one credit card, then take every extra dime you can find to pay as much of that debt down as you can each month. If you have more than one credit card, you will need to make a decision about which card to tackle first. Many people opt to pay down the card with the lower balance first, as it will take less time to pay off. If your accounts are fairly equal with regards to outstanding balance, consider targeting the account with the highest interest rate first. After your credit cards are paid off, you can then tackle other debts like your car loan, your student loans, and more.

The Power of Momentum

Keep in mind that by paying down more of the outstanding balance that is owed each month, you pay less the following month in interest. The process of paying this debt down does increase with time. You will notice that as you pay your outstanding balances down, your minimum monthly payment on your credit card accounts decrease. However, you do want to keep your payments the same rather than decrease them. By doing this, you will notice that more and more of your outstanding debt is paid off each month. Further, once one account is paid off, take the money you had been applying to the monthly payments on that account and put that money towards paying off your next debt. It can be slow and even rather frustrating to start paying down debts, but you will find that over time the momentum builds. By following these steps, the process of paying of your credit cards and even other outstanding debts will be faster and easier for you to accomplish.

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10 Steps to Overcoming Credit Card Debt

If you are struggling with credit card debt, you should understand that there is a process that you will go through in order to finally pay off that debt. Willingness to go through this process will help you undo the debt problem you have caused for yourself.

1. Realize That The Debt Is Your Fault

No one forces you to get into debt, so you have to understand that it is up to you to buckle down and pay it off. Blaming others will not help.

2. Find Ways To Pay Off The Debt Faster

Don’t waste money on things you don’t need. If you need to go out a few times a month, make some extra money first. Otherwise, just pay off your debt with extra cash.

debt problems

3. Don’t Tap Into Equity

Don’t take a loan to pay off your credit card debt. Keep your equity in your home and work harder to pay off your credit debt.

4. Sell Off Investments First

If you have stocks, or mutual funds, try to make a profit off those and pay down your debts. Investments aren’t valuable if you have too much debt.

5. Pay Off The Lowest Balances First

Find the card with the lowest balance and pay that off first. This reduces the amount of payments you have to make and the interest you are paying each month.

6. Make Small Payments

No matter if you have a couple dollars left over at the end of the day, you should make a payment. A dollar a day equals 365 dollars a year.

7. Cut Up the Cards

Cut up your cards and make sure you cannot use them. It is hard to rack up debts when you don’t have a card.

8. Work from Home

Get a second source of income. Whether it be a work at home job, or a part-time job, to gather a second source of money.

9. Budget

Make a budget so you don’t ever get into debt again. Getting out of your debt problems is not going to be a successful endeavor if you face the same problem over again.

10. Bankruptcy

If there are no other options available to you, it might be worth going bankrupt. You may still have to pay off your debts, but there is a chance that the whole thing goes away. That might be what you need now.

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Financial Mistakes That Students Should Avoid to Avert Debt

It’s a fact that managing personal finances isn’t a cakewalk at all and you need proper education and preparation for this. Most of the people even assume that children, especially young adults hardly have anything to do with managing finances because they are immature enough. This is entirely a wrong notion.

Just like formal education is important for students to increase knowledge, financial education is also important to grow up as a responsible person. It’s always better to educate young adults and students about how to manage personal finances prudently. This will help them to avert debt problems in future.

How students may behave responsibly to solve their debt problems?

Students and the young adults may easily take care of their finances through some easy yet efficient tips. The 4 most effectual tips have been described below for utter convenience:

1. The education cost must be maintained smartly

Education has become a costly affair in recent times. Various student loan providers are also there to help students for higher studies. These loans may be helpful for education funding but paying off the loans on time may not be convenient for all. Late loan payments may aggravate debt problems too. So it’s obviously important to take out the right student loan and pay it off on time. Otherwise the student loan debts may ruin your finances in future. Students may also get help of government grants and scholarships. As these grants don’t come up with repayment obligation, students may easily rely on them.

Students Should Avoid to Avert Debt

2. Full concentration must be on savings

Setting up an emergency fund doesn’t come up with any specific age requirement. Anyone from 6 to 60 years old may save. So you can easily teach the young members of your family to start saving. Those who aren’t employed yet may save from their pocket money too. Once they grow the habit of saving, it won’t be tough at all to maintain in the long run.

3. Controlled expenditure may do the trick

Maintaining the expenses is very much important when it comes to managing finances and averting debts. Students may try buying second hand books, carry home cooked food to schools and colleges and skip hiring taxis on every possible occasion. These things may seem trivial but they may help to accumulate considerable amount. Proper guidance may help the amateur people to learn the tactics easily.

4. A responsible attitude is equally must

Of course it’s important to maintain the good habits on a regular basis. Suppose you saved for a day and then forgot to maintain the emergency fund for next few months or you shopped one day frugally and then went on a spending spree again. This will hardly help in anyway. Now you can realize how important it is to be regular in your efforts for better finances. You must teach the same to the kids of your family too. Ask your kids to maintain the good habits so that they don’t have to come across any financial hardship in future.

Before you preach your kids, make sure you practice these 4 tips yourself. Save on a regular basis, pay off your debts on time, restrict your expenditures and follow a strict budget plan. These things will definitely help you to improve your finances significantly as you won’t have to face severe debt problems. Lesser debt problems mean increased savings and more savings will undoubtedly boost your finances. Also you must take care of your retirement savings to secure your life after retirement. When you’ll live an economical life you’ll hardly have to struggle with debt.

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Money saving tips – Eliminate debt and enjoy a financially secured future

Facing debt problems? Do you save money every month? Well, you actually don’t do so and this is why you have fallen into the debt trap. If you are too tempted to buy the lovely dress you’ve seen but do not have money, then you’ll definitely be swiping your credit cards. The worst part is that you fail to pay off the outstanding balance on time and thus, have to pay high interest on it. Even if you may not earn much, you should develop the habit of saving as soon as you get your first job. A sensible person will definitely save some money from his income every month so that he can have a secured future. If you have outstanding debt, you may use your savings to repay it. Thus, by saving your valuable money, you will be able to enjoy a financially secured life.

Some money saving tips for a debt free life

If you have accumulated huge debt, then this has probably happened since you do not know how to manage your money efficiently. You will have to understand the importance of dollars and try to eradicate every unnecessary expense that you make. Read on to know some money saving tips so that you can reduce debt problems soon.

1) Keep only the money you will need in your wallet

Do you carry extra cash in your wallet? Well, if you love to shop for the latest items that has arrived in the market, then you should keep only the exact amount you’ll need. This way, you will not be able to spend even a single penny without need. Besides this, it is advised that you do not keep even one credit card in their wallet. This is because since you love to buy new items, you’ll be swiping your credit cards for sure and may incur debt when you do not have money.

Money saving tips

2) Good budget is needed to know your affordability

Are you spending your hard-earned bucks lavishly? If so, then drafting a good budget is essential for you. Budgeting is very important in order to deal with your finances efficiently. With the help of a budget, you’ll know how much money you can spend for daily expenses and how much you’ll be able to save for future. If you’re having some debts, then you should work towards paying them off fast. This way, you’ll be able to save money and come out of debt.

3) Differentiation is essential between needs and wants

Do you have the habit of buying almost every item you see around? If yes, then you probably do not know the difference between your needs and wants. Your necessities are the items that you use regularly. On the other hand, your wants are the luxuries that you wish to buy for a better life. Try to part with your wants for the time-being so that you can save more and have a secured future. If you’re having outstanding debts, then you should pay them off at first before you spend money in purchasing your luxurious items.

4) Keep some money in the savings fund every month

Are you saving a certain percentage of your salary every month? If yes, then you do not need to worry about your future. In case you aren’t doing so yet, then you must start keeping some money in the savings fund. This way, you’ll be able to accumulate a lot of money with time. If you have some debts, then you may use some of your savings to get rid of them. However, you should never use all your savings to repay debt.

Saving money is very important so that you can have a secured life. So, if your financial condition is tight now, you should still try your best to save every possible dollar you really can. Thus, follow these money savings tips to stay away from debt and have a better future.

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