Raise your hand in case you are heavily in debt, with savings that are too little to boot.
It goes without saying that a major section of the society these days spends a whooping amount of their income paying off debts. Despite working round the clock, you are able to save too little for retirement. Saving is often the toughest challenge.
Most people are tired being broke all the time, managing life from one pay check to the other and still there is no dent in their debt despite spending hundreds of dollars every month. We all know that saving money is important while paying off debt faster. What most of us lack is information regarding making investment for retirement while repaying debts such as urgent payday loans.
There are several ways that can help in securing tomorrow. We think about doing things but are not able to implement them because of some or the other reason. You can now make save money for rainy days while repaying off loans. Here are a few tips that would help you in making your future secure.
Save up expenses of one month
This is the first thing that you have to do. The first and the foremost step you have to take to break the debt cycle are to have money in your accounts today. It is often that we realize that we have no or less money in our account. This is exactly where it becomes essential to plan a budget, and most importantly adhere to it. This will help you in putting money aside every month until you have money saved to meet a month’s expenses.
Start every month with all the money you need already in the bank, courtesy the savings account. As you go through every month, try to save money for the expenses of the next month. In all possibilities, you will be able to fully fund the expenses of the next month by the 20th of every month.
You might not be able to get ahead on the current income only. It is crucial to focus developing a well-paid side hustles such as blogging. If you just earn income that helps in covering current expenses and needs, or perhaps not even that, then the only way to deal with this problem is finding a way to bring in additional income. Once you have a month’s worth of living expenditures saved up, you can focus on the next step.
Do you have credit card debt?
Credit card debt is yet another most expensive form of debt that you can have, and could cost dearly on your pocket. You have to pay thousands of extra dollars in interest. Set your priority to get rid of this debt.
After saving sufficient funds for the next month by the 20th, all the remaining money for the month can be reimbursed to pay off existing card balances. You can get rid of this credit card debt within a few months, if everything goes well as planned.
Have an aggressive approach with your investments
Make sure you have a high percentage of your portfolios in stocks. When you start early in your career, you can have a long investment horizon as it will help you in handling the ups and downs of the market. There is an asset allocation calculator available online that will help you in creating a balanced portfolio of investments that best fits your risk tolerance and time horizon. Instead of investing in individual stocks, you can invest money in exchange-traded funds or mutual funds. In fact, you can also target-date fund and diversify investment portfolio.
It’s time to build an emergency fund
Start building an emergency fund right away so that you no longer have to rely on credit cards, or worse, on your retirement savings, for unforeseen situations such as medical emergency or car repair. Ideally, you have to save up to nearly six or seven months’ worth of living expenditures.
Repay remaining debt
Next you need to get rid of remaining loans and bump minimum payments up to much higher levels once the goal of saving accounts is funded. Once you have sufficient funds in your savings account to mitigate common fiscal emergencies, you have to now work of reimbursing remaining debt. At this point of time, continue paying expenses of the next month early, and once you are able to meet that quota, the additional income goes to other debt. You can plan to make use of the debt avalanche method for paying off the remaining debt. You can line up debts in order of highest to lowest rate and repay the most expensive debt first.
Whatever your additional payments are, let them go off to the highest-interest debt until it is completely paid off. Then you can apply those payments to the next highest debt until the next one is paid off, and then add infinitum until you are able to pay off all your debts. The primary key is to pay at least the similar amount every month, not less as each debt is paid off. You can knock down remaining debt in this way.
The best way to get rid of loans and debts is by setting up an automatic transfer of funds to a particular savings account so that a particular amount – say, for example, fifteen percent of your gross monthly earnings that comes off your salary cheque automatically. In this way, the question is not to find the determination to save each month. Thus, what you have to do is save for the goals you want to achieve and then spend the remaining money.
It’s time to live a debt-free life
Although boosting saving while repaying debts and loans is tough, it is not impossible. You need to have a right plan in place that is customized according to your situation. It will help you in achieving both objectives without fail. This plan will not require putting in more efforts and finding out the most criticalelement that is to adhere and stick to monthly family budget. This is something you should otherwise also do. Purposeful financial behaviour along with the foresight can help you live a debt free life.
To sum up
Well, it might not be easy, and tricky to find out the right way to strike a balance between saving money for the retirement and paying off debt. Given that most people, today, live a life of debt, developing the habit for saving money might be challenging. However, saving funds for tomorrow is the key to live a happy life. Regular savings also help in dealing with unexpected problems such as medical costs and car repairs. Once you have savings, you do not have to rely on credit cards for tackling the problem of unexpected problems.
So, even if you are paying off urgent cash loans, make it a point to save money for the retirement by adhering to savings habit. Getting rid of financial stress is essential for all and sundry. Saving money for rainy days and retirement is something that you should start today. Get going right away for a secure and stress free after job life.