The two main areas of concern for the financial circumstances of the average individual are the amount of their debt and the desire to add to their savings. It is necessary to pay down all of your debt and take care of regular monthly expenses before you can save any additional money for your future. It calls for some wise decisions to be able to pay for the necessities of the present time and save for your future needs.
In order to pay down debt and add to savings, you must make a decision to make a compromise between the two ideas. There are some people who will try to pay off their outstanding debts quickly and forget about saving any money for a rainy day fund. There are also some who decide to have a certain amount of savings and will not be concerned about paying the current bills they owe. You should have a little savings for unplanned or emergency situations.
A good way to add to your savings is to pay your debts on time and avoid having any extra fees added for being late with your payments. You should inspect your total debt load in order to decide what debts are good debts and what debts are bad debts. Some examples of good debt are mortgages or student loans, while some examples of bad debt are high interest loans and credit cards.
There are a few advantages to holding on to good debt, because you can take longer to pay off the balances on them and tax deductions can be obtained on student loans and mortgages as you continue to pay on them over time. Bad debt should be paid off as soon as possible or you will not be able to put any money into savings. A good plan to use in these situations is to pay a larger payment than you are required to pay, so some of the payment will go toward the principal as well as toward the interest on the loan. If you follow this plan for a while and try to get your bad debts under control, you will be able to put some of your disposable income into savings.
You need to make a list of all of your high interest debts and then simply go down the list and mark them off as they are paid off. The extra money you have after paying one debt off can be applied to the next debt on the list and so on until you have them all paid off completely. The wise thing to do is to avoid debt until you have accumulated some savings for an emergency situation.
Your ultimate goal should be to get more money freed up to put into various savings options and investments for the sole purpose of saving for your retirement or a child’s future education. If you want to get out from under debt and have savings when it is time to leave the workforce, you absolutely must find a way to determine the difference between good debt and bad debt. It is possible to pay down debt and have savings too.
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You have given your readers an excellent way to build financial security. Now the ball is in their court. They will have to be determined, responsible and disciplined enough to follow your advice. If not, all will be for naught. And of course your suggestion regarding and good debt will help them along the way.
Evelyn Guzman
http://www.debtchallenges.com (If you want to visit, just click but if it doesn’t work, copy and paste it onto your browser.)