Whether you have used your credit card to see you through university or need to pay some money off for the mortgage you’ve just signed, now is the perfect time for paying off debts. There are a number of credit cards and mortgage rates to choose from initially, but when the debts are rising there are many ways you can go about employing money saving techniques.
For many people, there’s a fine line between having money in savings and paying off any debts. But, knowing which is more important can be tricky. It might seem like perfect sense to have a bit of money tied up somewhere for a rainy day but it’s more frugal to have no debts lingering around. Of course, getting rid of debt is the top priority but it just doesn’t feel feasible, right? Well, keep reading as we look at ways to increase your cash by debt pay downs.
Understand your debt
Take the time to take a deep look at all of the money you owe to different banks, and figure out how you can track this. With most companies you will have automated amounts flying out of your account, and this makes it hard to put your finger on exactly what is left to pay. Start by stopping any more debt and create a budget that works with the debt you have. Whether it’s your student loan, a car loan, credit cards or a first-time mortgage be sure to allocate at least 10% of your income to paying it off.
One Credit Card at a Time
Some people have one credit card outstanding, but many have a list. What the experts say is to create a hierarchy so that you go from the highest to lowest interest rates, and pay them off one by one. It’s simple economics that shows you can save money by going from the worst rate to the best but many people are so concerned about the numbers they have and try to pay them all off in a slap-dash way.
Being savvy in any market can save you a lot of money. By comparing the market, you can take advantage of offers that are being thrown around and save money on your shop. There are applications on the internet to compare product prices, and comparison websites like Rate Supermarket for monetary advice. Always try to make your food shop a weekly, or even bi-weekly one, and stick to a plan when it comes to clothes or food store spending – a meal plan may seem a bit lame but it can trim down your expenses.
Many people think that so-called “experts” are a bit of a waste of time, but they’re only there to give guidance – and, in times of debt, this is what you need. It can sometimes feel like you are in over your head, but a plan is often all you require to get back on the right track.
The economic downturn has affected one and all in some way or another. But, with a bit of time set aside for debt management, we can all get financially fit moving forward. Whether you’ve just finished university or are getting that first mortgage, be sure to pay off your debts as quick as possible to save you money in the long-term.
How have you planned to pay off debt? Are you using the snowball method?
This is a guest post.
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