6 Personal Finance Hacks to Get Out of Debt
November 22, 2019 (Investorideas.com Newswire) More than 189 million households in the United States have some credit card debt. The average family carries around $8,000 in high-interest debt that could be wrecking their finances. If you’re unable to pay off the balance, it will carry over to the next month and becomes a vicious cycle. Take a look at these life hacks that will change the way you approach debt pay-off for good.
Pay Off High-Interest Debt First
You know you need a debt pay-off plan, but where do you start? There are several types of bad debt — credit cards, payday loans, and expensive vacations are just a few examples. Sit down and examine your credit card debt and set up a payment plan to get it paid off. Once you've paid off all your high-interest loans, you can save more money than you imagined.
Pay More than the Minimum
While private loans from higher education typically carry lower interest rates than credit cards or personal loans, terms tend to be longer as they’re meant to be an affordable monthly payment. The problem is, the payoff date cannot come soon enough. By making double payments, you can shorten the payoff schedule without inflating monthly expenses too much.
Automate Your Finances
Once all of your debt is paid off and you've cut out a lot of unnecessary spending, then you can focus on automation. Putting your finances on autopilot means more than just paying bills on time. You should have an automated schedule for saving at least 10% of each paycheck you take home. Once you've got a savings schedule and bills automated, you can focus on an investment strategy for the future. Investments can be a great way to grow your wealth if you're smart about your goals.
What's Your Budget?
Keeping your new automated financial schedule on track means budgeting yourself. There are several useful budgeting apps on iOS and Android to keep track of your finances. These apps can help identify problem spending areas where you could trim even more spending.
You should have emergency funding built into your budget each month, too. Set aside enough that can cover any unforeseen expenses that can happen. Having $500 ready to go in an emergency can make a massive difference in the long-run. Don't stop adding to your emergency account when you reach your goal. Try setting aside a percentage of your current paycheck to emergency funding. That way, this fund grows monthly.
You may think getting yourself back on track with your finances means cutting out the fun, but that's not always the case. You can pay yourself in your budget to allow some discretionary spending. Most people who say a budget doesn't work for them tried to stop spending their fun money altogether. Start with an amount that feels right and adjust it up or down as necessary in your budget. Ultimately give yourself room to have fun but still take care of your necessities.
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