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Struggles with Debt

Consider these 5 Steps towards Relieving your Struggles with Debt

Step 1:  Acknowledge your Problem; this might be the most difficult step for anyone.  Many people harbour the false hope that something will happen to help them out or sometimes just hoping the problem will disappear.  Rather commit yourself to get out of debt and then stick to the commitment.

Step 2: Make a list of all the debt you have in order to determine how much it really is; this can be very scary because most people do not know how much they really owe.  On the list, you should write down to whom the money is owed, the minimum monthly payment, the balance of each debt as well as the interest rate you pay on each.

Step 3:  Make up a Budget and a list of ways to cut your expenses; find the leaks in your budget.  Where do you spend money that you do not need to be spending money?  Review all contracts; like your cell phone contract, Cable services, gardening services and refrain from taking expensive holidays and spending too much on entertainment.

Step 4:  Stop using debt, like credit cards; it will do no good if you keep on making more debt.  Continuing to use your credit cards will only worsen your debt load and will not do a thing to help in solving your problems.  Rather go on a strict spending diet and focus on paying off your debt.

Step 5:  Prioritize; put your debt in an order you will pay them off.  Target the more expensive debt with higher interest charges, like personal loans.  These will cost you more the longer it takes to pay off.  You can try to pay off more than the minimum payment to minimize interest charges.  Keep your car loan and home mortgage up to date.

Nobody wants to be in this position, but, life happens, and you cannot always come out on top or like a cat, land on your feet.  Unknowingly, you can prolong your financial setback if you continue to make decisions that are bad for your pocket.

Things you should not do when you are Broke and in Debt:

  1. Do not take out a loan for paying off debt; or a loan for a new car, or, for that matter, do not take out a loan for any reason. When you are broke you do not have money and you cannot afford to add another payment every month.
  2. Do not loan money to a friend or co-sign for a loan for someone; they are probably in the same dire straits as you. Co-signing means that you accept responsibility for the payments if the other party cannot make it.  You do not have money, to begin with, and should not promise any to somebody else.
  3. Do not treat yourself with an expensive vacation; using credit cards and money you do not have. You’re broke.  You cannot afford a vacation, expensive or not.  If you maybe have money saved up to go on vacation, you can rather use it for something that needs payment urgently.  Maybe an overdue bill, car repairs or saving it for that unplanned thing, that always seems to happen when you can least afford it.
  4. Do not eat at restaurants or buy fast food; it is a lot cheaper, and healthier, to buy groceries and prepare your own food at home. Pack your own lunch for work.
  5. Do not overdraft on your bank account; a negative bank balance will be charged overdraft fees, more money to pay towards debt when you already do not have any, to begin with. Try to keep your bank balance out of the red.
  6. Do not be late with your bill payments; again, fees will be added to late payments. And again, more money is added, to pay next month, money that you already did not have to pay this month.  If you should fall too far behind you can have services disconnected and you would have to pay the full balance and a reconnection fee before it can be restored.
  7. Do not quit your job; without being sure about a new one. Even then, it is better to stay with the sure thing you have, with the income you have every month.  You know where you’re at, at your current job, but won’t know what to really expect from a new job.
  8. Do not pretend to have money; people will expect you to spend money if they are under the impression that you do have money. You do not have to tell all to everybody, but it is better to just say you cannot spend too much at moment due to unforeseen matters.
  9. Do not pay to get your house cleaned, your car washed or the garden tended; this is all things that can be managed by yourself. Do not pay someone else for things that you can do yourself.
  10. Do not pay for subscription services; cable services, movies, magazines, health clubs, the gym, are usually things that you can stay without for at least the time being. Cancel all recurring expenses.  You will have to get used to living without, but it will help you save and pay off your debt, a little faster.
  11. Do not waste water and electricity; these two services can be controlled. You can turn off the lights in rooms that are not used.  Keep only the minimum appliances on during the day and switch off most during the night.  Do not let the water run.  Do the washing with cold water.  There are many ways to save on electricity and water by just using it wisely.
  12. Do not drive more than you have to; combine all your errands and drive only once to do everything. For example, do the grocery shopping when you go home from work.  You can save money on gas when you do not drive double shifts.  You can also use public transport, walk, ride a bicycle and carpool, to save money you would have to spend on gas.

There are still so much more do not’s and buy not’s, do not buy expensive gifts, or for that matter, any gift.  Do not frequent nail, hair and spa salons.  Do not buy new electronics.  Do not buy cigarettes daily.  Do not buy anything that is not an absolute necessity at this time.

When all is said and done, the debt paid off and you did survive, you can celebrate a little.  But, still, keep it small and simple.  The reward should not start you off in the wrong direction again.  Throughout the whole process, you should remember all the lessons learned, steps taken and the do not’s, and then use this to keep living debt free and financially strong and free.

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Categories: Article

How to Start an Emergency Fund

Most people do not plan adequately for the future. It is attributed to the tough economy that makes it difficult to save. Studies indicate that majority of Americans lack a fund that caters for their emergencies. Hence, most people rely on sources that are outside of their income. As such, these sources are never guaranteed. They may include sourcing for bank loans, asking of funds from friends as well as selling household goods.

emergency fundThe disadvantage with bank loans is that they attract higher interest rates. In cases where one fails to pay the loan, it can lead to loss of hard earned investments such as properties. Friends may also lack the financial capacity to offer assistance as they may have their own financial hurdles. Financial advisors advocate for emergency funds to take care of eventualities that occur. These experts propose having savings that can cater for expenses of more than six months. You could be wondering how to start an emergency fund. However, it is easy. You can choose the various methods proposed.

Here is a closer look on ways to start your emergency fund

Spend saving the change

When you are spending your money, ensure that the change is saved. Most people prefer the use of credit cards when purchasing items. However, the use of cash can help in saving for your future. You will be astonished by the amount of money you will save for a month.

Savings account

You can choose to open a savings account in a bank. The accounts ensure that the access to your savings is limited. The accounts offer seasonal access to the funds. It is because the funds are meant for occasions such as the holidays. Thus, by withdrawing the money before the due date, it attracts a penalty. The penalty will ensure that you develop the discipline for patience on your savings. It is not often that we are faced with emergencies. Hence, the savings account can help in building your emergency fund.

Avoid impulse buying

Impulse buying has been linked to increased spending. You can choose to avoid it by purchasing the items that you only need. It will help in avoiding purchasing items because they are on sale or are appealing to your eyes. It will also help you in spending less money. Thus, it will assist in saving the money that would have been spent. It will lead to building the emergency fund.

Conclusion

Emergency funds are not easy to build. However, with dedication you can face the emergencies courageously. The options recommended may not help in accumulating a lot of money. However, they can assist in developing the habit of saving. Thus, the proposed methods assist in knowing how to start an emergency fund.

References:

http://www.moneycrashers.com/start-build-emergency-fund-savings/

http://www.learnvest.com/knowledge-center/5-ways-to-start-an-emergency-fund/

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Categories: Article, Funding

Personal Finance Basics

What’s do you mean by personal finance basics, Management of individuals or family income and expenditure, it includes all basics? In this article we are going to help you break down the persona finance basics for you so that you can start to improve your financial situation much faster!

Follow These Rules and You’ll Be Just Fine

1. Saving :- In that how much you earn and what are your savings is basic things of personal finance.

2. Planning of short term and long term need :- it is one of the important basics of personal finance cause in your mouth monthly earnings you have manage all short term and long term needs. For example. EMI of home loan or insurance it includes in short term and education of child’s or pension plan it’s includes in long term..

3. Goals :- In our of every one set a goal for ourselves or family. And for that we have to manage financial side, Cause it’s basic of goal.

4. Insurance and Tax :- insurance is one of the important basic cause insurance will protect yourself and your family also and you have business then it will secure your material also, in short I just want to say Insurance will balance your financial imbalance.

5. Financial Literacy :- financial literacy is essential parts or basic of personal finance financial literacy means mobilization of Financial knowledge. How to balance your earnings, On front of income and expenditure, Same like how to increase your income and opposite how to decrease your expenditure because management of expenditure is very important.

6 . decision making :- decision making is also important basic of personal finance cause most of people don’t take Financial decisions when want to buy any products or any other things they are unable to manage financial balance, when they want to buy one time more things, What to buy or what to not means they want every things rather it is essential or not But they can’t take correct decision. In economics there is also one research for personal finance. How to balance personal finance it’s called micro economics.

And due to lack of personal finance knowledge many colleges having courses for personal financial management.

7. Likes or Dislikes:- it’s also Important part of personal finance cause most of time we buy that things which is not essential but we liked it more and because of that we lost our financial management means we spend more money on unused parts so remaining important things we have to manage. but we already spend more money so now we don’t have anything. So u just wants to say, Only buy things which is essential.

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