February 22, 2012

Getting rid of Debt

Credit cards

Image via Wikipedia

Most adults will at some point in their lives acquire debt. This is something both natural and sometimes stressful. Part of debt is the ability and decisions to pay off the debt you have. Here are a few ways to ensure that you can pay off your debt , whether house mortgage or short term loans reasonably.

  • Set up a budget that includes both income and all debt or payments that you have acquired.
  • Set aside money for the debt you have in small monthly amounts. This will help you pay off debt slowly while still allowing for other expenses and spending money.
  • Minimize acquiring new debt by limiting credit card usage to emergencies and by limiting spending overall to create savings.
  • Set aside a portion of all bonus or surplus income to help pay off debt and be set into savings.
  • Do not use your savings unless it is necessary. Savings are ideally used for emergencies and will help prevent further debt in those situations.
  • Consolidate debt. If you have the option of combining your debt into a single monthly payment it will typically be a lower payment and easier to keep track of.
  • Do not miss debt payments. Credit cards and other debts will often have late charges and over the limit fees that will increase your debt as much if not more than actual spending will. By missing a payment you will increase your debt and monthly payments will go up.
  • Re-financing is a last resort idea and does increase debt. However, it should reduce your monthly payments.


 

 

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Filed Under: Finance, Personal Tagged With: , ,

Ways to Avoid Bankruptcy

Monopoly

Image by Mike_fleming via Flickr

Going bankrupt means you’ve lost if you’re playing Monopoly. In the real world, it means that you’ll have a hard time getting any kind of loan for a few years, and you’ll have a mark on your record for close to a decade. While bankruptcy isn’t as bad as losing a limb, it’s a whole lot worse than keeping your finances on track to start with. Let’s look at some things you can do to avoid bankruptcy.

Chapter 7 bankruptcy basically means you have no more options left. This is when your debts are eating you like fire ants. The first thing you can do to stave this off is to spend within your means. While developing a budget isn’t critical, knowing how much you need to survive each month is. A lot of people find that automating their bills is a valuable step toward becoming financially independent. Tracking expenses is a good idea, making things easier if you’re not a financial genius.

Another thing you can do to keep from going bankrupt is to think a few bills ahead. A lot of people get into trouble because the amount of money in their checking account is struggling to catch up to what they need to spend this week. While this week is important, it’s also important to remember that next week is going to be here soon. Unless you want to end up a paycheck behind, keep the future on your mind and think like the future is right now.

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Filed Under: Business, Economy Tagged With: , ,

How to Budget

Sample budget

Image via Wikipedia

Finances are something that many people struggle with on a daily basis. Some people don’t make enough money to support basic life functions, some people make enough money but spend without regard to finances, and then there are the few who have learned how to live in a budget or don’t have too.

For those who need to live inside a budget and haven’t really ever done so there are a few tips on how to go about creating and sticking to a budget.

  • When you are setting up a budget it is something that all contributing house hold members are apart of.
  • Setting up a budget first looks at how much money is made per month as a household. Each family member will total up their earned income and their expenses. Rent, utilities, credit card bills, and food combined with paychecks, loan disbursements, and other earned income.
  • Once you have a total of your expenses vs income you can start to revise a reasonable budget. After you have gathered the information the next step is to adjust expenses to fit the income. You can not budget in the opposite direction because there is no guarantee what your expenses will cost if you are not choosing them in advance, making the process of setting aside money slightly more difficult.
  • A good budget will offer both surplus spending money for extras and a little bit of savings money. surplus money will allow you to have emergency money or saturday night date money and savings can help on a rainy day.
  • The most important part to a budget is, once it is set up, sticking to it!
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Filed Under: Finance, Personal Tagged With: , ,

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