No one likes having a debt cloud hanging over their heads. It is a mood killer. If you are dealing with mounting debt, here are five ways to save a little extra money and pay back that debt now.
The major barrier to paying off debt is having the money to do so. After all, you still have to eat, have heat, water, and lights. If you live in a remote area, you need your car to get to work. All of these bills are called necessary bills and they need to be paid in addition to the credit card debt.
Sometimes, there is credit card debt but the real problem is the necessary bills. In the economic climate, one or both people in the home losing a job can create a real financial hardship. Many have fallen behind in their mortgage payments. Credit card bills are a distant, distant second to more vital bills but by not paying them, late fees can accumulate and create another problem.
1. Cancel unnecessary amenities. We all like our satellite and cable television, but it gets quite pricey. The same goes for movie services like Netflix and Blockbuster. Going back to regular television and only renting movies from RedBox can save you as much as $150 or more a month.
2. Hold a yard sale. You must have a few things around the house that you don’t use very much. Hold a yard sale. If you have other family members in the same area, get everyone together and have a family yard sale. Whatever you don’t sell can be given away to charity. Don’t neglect stores that buy used books or merchants that buy old gold (they are everywhere nowadays).
3. Cook at home. There doesn’t seem to be enough hours in the day sometimes but you can cook a large meal and manage to get several leftovers out of it. Your reason for not cooking may be related to the fact that it is convenient. If you ever look at your bank account statements, a good portion of your funds are spent on convenient food. Spending $200 a month (double that if you have a large family) on groceries and cooking saves you at least $200 in extra food costs by not eating out. There’s no sense in going to the grocery store and the drive-thru.
4. Carpool. This is an option if you live near some fellow employees. Every person in the carpool can take turns driving for a week. It saves gas and money that can be used for something else.
5. Use cash. If you don’t have the cash to buy it, you don’t need it. Relying on credit card will only increase your debt and that is like going in reverse.
Saving money is almost as hard as paying off debt. Use these five suggestions to help with the saving money part so you can pay back the debt part.
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How to save money and pay back debt
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Free Money Or Credit Card Debt?
Every time an individual goes to the grocery store, the items in the cart may be less, yet the total bill is still higher. Likewise, based upon the prices at the pump, consumers may often wonder if the tank is being filled with liquid gold.
In general, the cost of living seems to be rising faster than the typical household budget can accommodate. No problem! If cash is short, simply whip out the little plastic rectangle from the wallet, and basic needs, and many wants, will not have to be sacrificed to a shortage in finances. Actually, used in excess, credit card debt can fast become a really big problem, and insurmountable financial woes are lurking around the corner.
Used in moderation, credit cards are an excellent tool for making necessary purchases. For example, possessing large amounts of cash seems like tempting would-be pickpockets and muggers to “pick me!” Rather than opening a wallet to reveal the entire vacation budget, travelers often opt to use a credit card for financing the journey. Actually, the practice is a smart idea, under one vital condition: avoid credit card debt; pay the subsequent bill in its entirety.
For the rare individual, a credit card is an excellent means of controlling the budget and earning cash back, or significant travel rewards. Used carefully, a credit card can be implemented for paying all the regular bills, groceries, and gas. Then, at the end of the month, when the bill arrives, the amount is paid in full with a single check or an electronic funds transfer.
Unfortunately, a growing number of credit users are experiencing the financial woes of credit card debt, because the bill cannot be paid in full during the billing cycle. Month after month, the unpaid balance continues to grow, and in no time at all, the card is maxed out. In addition, once someone has one active credit card account, the mailbox is soon inundated with offers for introductory rates on additional cards. Soon, one card-for emergencies only-soon becomes 2, 3, 4, or more cards.
At first, the credit seems like “free” money. With only a signature, a consumer can purchase the perfect outfit, electronic device, or any number of wants. Yeah! Tired of always having to feel deprived, or shopping for sales, the card seems like a dream come true, until the bill arrives, and the person wakes to a real-life nightmare. Now, the budget is even tighter, to included the new credit card bill/bills. Spending is out of control, and the consequences of credit card debt can be devastating.
The consequences are bills, bills, and more bills, compounded by the excessive interest on the unpaid balance. Generally, credit cards charge 18-23 percent interest. While the numbers may seem insignificant at the time, the additional monies owed for the privilege of paying the balance back over a long period can add up quickly. For example, an individual [...]
Save Money or Pay off Debts
Save or Pay Off Loans and Credit Cards?
Most people would love to live without any debt. We dream about the day we can burn or mortgages, drive a loan free car, and not owe a cent to credit card companies. Since that seems to be a distant goal, some of us dream about winning the lottery, or chucking everything to live in a shack in the mountains.
Have you ever thought about end of the world movies and stories? I think that people like them because they can picture a life without debt, even if something really awful has to happen.
But you really have to look at your debt. Some people should worry about stashing cash instead of reducing their mortgage or car loans. I cannot give everybody a right answer, but only say that it depends upon your situation.
Move Credit Around
Even if you cannot totally cut your debt, you may be able to reduce it. Look for refinance offers, or offers to transfer your credit card bills to a lower rate card. If you can reduce your interest rate by a couple of points, you may save lots of money every year.
Look at high interest rate credit cards. It is not unusual to see 25% interest rates these days. If many Americans carry $8,000 in debt, that means they have to pay $2,000 just to service it. If you could reduce that interest rate to 12.5%, you could save $1,000 every year without working any extra hours.
Make Sure You Save Too
A savings account can keep you from having to borrow more money. If you have to take a kid to the dentist or emergency room, you will be happy to be able to right a check for your portion of the payment. I would not tell anybody to pay off all debt if it means they have no way to get cash.
Try to Stay The Course
You need to have a goal, and a way to reach that goal. Consider putting an extra fifty dollars toward paying off loans, and then allocating an extra fifty dollars toward your emergency fund. Even a modest amount is better than nothing.
But if you plan to use $500 to pay off debt, and then never get around to actually doing it, you will not help yourself.
Evaluate Loans vs. Investments
If you are lucky enough to have a low rate mortgage, but a high return investment account, you will probably do better to leave things as they are. If you can earn 8% on your money, but only pay 6… on your mortgage, you may be better off by paying off your home the slow way.
Also consider taxes. You can deduct mortgage interest, but you have to pay taxes on your gains. If you really sit down and analyze your situation, you may be better off by keeping your loan payments in place but using extra money to higher interest debts, that cannot be deducted, as low as possible.
As usual, there is not one right answer for [...]
