The main causes of debt are:
Spending more than you earn
This is simple to understand but hard to fix. Lets say you earn $1300 a month and your rent is $500 a month, bills are $300 a month and food is $200 a month. Alright, that leaves you with $300 a month, not good! Car repairs, gasoline, tax - bam there goes another $400! Now you're losing $100 each month.
Recless spending
Same scenerio as above, but lets say you earn a little more like $1500 a month and consistent outgoings are $1200 a month, leaving you $300 a month for fun. Wanna go out at the weekends - $100 gone. New lawn mower - $150 gone. New Car... $250 a month for 4 years! Can you really afford all this stuff?
Loss of job
This is a horrible situation to be in. You have costs of $1000 each month but you used to have $1500 income each month. The income is gone but the costs haven't. If I were in this situation I would cancel all TV, Internet, subscriptions etc and start looking for a job anywhere doing anything! Time is against you here.
Unavoidable costs
Lets say you or someone in your family needs an emergency operation. They HAVE to have it and you need to pay for it. The bill is $3000 and you don't have it. The bank does. Loan company's do. Welcome to debt land, population - you... and about 100 million others
Read More
Showing posts with label mortgage. Show all posts
Showing posts with label mortgage. Show all posts
Saturday, 11 July 2009
How to Get Out of Debt
Everbody has a reason they are in debt, and it is usually down to their finances being all over the place.
Here are 8 simple steps for getting out of debt:
1. Work out your debt
Who do you owe and how much do you owe them?
2. Budget your money
Draw up an excel spreadsheet to show your income, and what you will be spending it on. Make sure you include monthly debt payments.
3. Discipline yourself
Don't get into further debt with recless purchases or taking any more loans.
4. Cut your daily spending
Give yourself a weekly budget and withdraw that much from the bank. Leave your cards at home and spend only the money you have withdrawn. If you have some left at the end of the week, put it in a jar on the side and repeat. In a few months, check the jar and see how much you have saved.
5. Organise your bills
Account for all utilities bill, making sure they are ALL in your spreadsheet with the actual figure.
6. Change your utility suppliers
Get the best possible deal. Many people use the same utility supplier from the moment they move into a property. Always shop around.
7. Change to a cheaper credit card/loan
Many loans and credit cards will offer better rates then the one you are using right now, and when you switch you will usually be given a 6 month interest free period.
8. Discard store cards
Store cards are a great way for a store to make money... from you. You pay for the product and then some! They have higher rates then any credit card and should be cut up and thrown away.
9. Organise your bank account
Make sure you are getting the best deal you can on you bank account such as low interest on overdrafts, and high interest on savings accounts. Increase your overdraft limit if you often go into it.
10. Change your mortgage
Shop around and find the best deal on your mortgage. Remember that you want to pay as little as possible each month until your debts have cleared. If you have been paying off your mortage for 10 out of 25 years thats 15 years left at the same rate as day one, like £500 a month. You can switch to another mortgage for another 25 years on as low as £300 a month.
Read More
Here are 8 simple steps for getting out of debt:
1. Work out your debt
Who do you owe and how much do you owe them?
2. Budget your money
Draw up an excel spreadsheet to show your income, and what you will be spending it on. Make sure you include monthly debt payments.
3. Discipline yourself
Don't get into further debt with recless purchases or taking any more loans.
4. Cut your daily spending
Give yourself a weekly budget and withdraw that much from the bank. Leave your cards at home and spend only the money you have withdrawn. If you have some left at the end of the week, put it in a jar on the side and repeat. In a few months, check the jar and see how much you have saved.
5. Organise your bills
Account for all utilities bill, making sure they are ALL in your spreadsheet with the actual figure.
6. Change your utility suppliers
Get the best possible deal. Many people use the same utility supplier from the moment they move into a property. Always shop around.
7. Change to a cheaper credit card/loan
Many loans and credit cards will offer better rates then the one you are using right now, and when you switch you will usually be given a 6 month interest free period.
8. Discard store cards
Store cards are a great way for a store to make money... from you. You pay for the product and then some! They have higher rates then any credit card and should be cut up and thrown away.
9. Organise your bank account
Make sure you are getting the best deal you can on you bank account such as low interest on overdrafts, and high interest on savings accounts. Increase your overdraft limit if you often go into it.
10. Change your mortgage
Shop around and find the best deal on your mortgage. Remember that you want to pay as little as possible each month until your debts have cleared. If you have been paying off your mortage for 10 out of 25 years thats 15 years left at the same rate as day one, like £500 a month. You can switch to another mortgage for another 25 years on as low as £300 a month.
Read More
Subscribe to:
Posts (Atom)