Tips to Eliminating Debt and Bright Money Future

There is a lack of financial investment and education in our schools, among the many things that do not teach. If you are a high school graduate who does not know much about finances, except how to write a check and balance your cheque book, investing or saving for retirement is something you probably haven? T given much thought. So here's some advice:

Eliminate debt

To better eliminate debt, calculate and make a list of what they are spending on each debt repayments and that you have it. Make a commit to that amount to permanently add to its budget. This part of its budget, I like to call the debt payment of money, you can not change until they pay their entire debt for this method to work better.

If you have any more money, get an increase or reward to a bonus, to add that this budget. Do not go out and fly. The most important factor in the elimination of debt is not to add to make purchases that you do not really need. That's how you got in your account debt. If you can not pay for it in cash, you do not need.

Take a look at each and put the debt at one of the following categories, listed in order of priority: high-interest debt, not tax deductible debt, tax write-off debt, and mortgages.

High interest debts are your credit cards or high interest loans. These should be paid first. Consider switching to a card rewards as a reward credit card. Once this debt is eliminated, take the money they were paying their cards and loans and add it to payments next on the list to be eliminated.

Do not tax deductible debts are lines of credit, bank loans or car. Because you are adding the money they used their cards to pay for these payments, you pay that debt off much earlier.

Once again, after paying their loans, take the money used on their cards and loans and make your student loan or other tax-deductible debt and wipe out this debt.

You are almost free of debt. Their mortgage debt is the last you want to apply its debt payment out of money. You are going to make extra payments with all the money they have released by the elimination of its other debt. You are not simply paying interest on your mortgage, and any extra money you pay for your mortgage go directly toward the principal. Let's say you have $ 100000, 30-year mortgage with a 7.5% annual interest rate.

You have been doing their regular payments for 5 years. Now you decide to send its extra $ 250 each month. It has reduced its mortgage of approximately 12 years. That is 12 years that owns his house, not the bank. To find out when going to pay your mortgage, using a mortgage payment outside the calculator is online. The excitement over how many years you are debt free will give you the motivation to stick to this plan.

Rule 10%

Do not start investing before eliminating their debt. First is the importance of becoming debt free. This is an exception, one of the oldest investment rules, it set aside 10% of each paycheck and investment. This is not really going to spoil your monthly budget and something that anyone can start easily. By investing a percentage of their income, rather than a random number, will motivate you to be consistent. If their salary ranges, so that 10% the amount you're putting away. Therefore, go ahead and start building retirement funds.

Be realistic

Common sense tells us packing a lunch instead of eating out is going to save money. Enjoy a movie with your family every Friday night is obviously going to bring consequences. Go to Caro O'Latte Cafe every morning coffee instead of beer in his home is a safe budget leak. The question is why do these things? We have become comfortable. Everything is automatic or drive-thru or my favorite, "I had to. "Did someone come to you and put a gun to your head and say:" You have to buy a new car thing that you've been driving around for two years is a piece of garbage. "I highly doubt that happened.

Any purchase of cars, either new or used is not an asset or an investment. The minute's drive outside the luck in his new car depreciates its value automatically. Newer cars carry the highest insurance rates. Buying new is not a wise decision. Used Cars, but also the depreciation of the enormous losses felt with a new, it is not. The rate of depreciation is much lower. Take drive your car, you get oil and filter changes, melody and get a run on the ground. After that, buy another used car and do the same thing.

Bonuses and Raises

This is so frustrating to watch. People who get an increase or a bonus and spend it on something, which at best could be described as dumb, drive me crazy. Invest your 2% by adding the amount to raise its 10% are already investing. Take your premium and put him in an emergency fund savings account. You lived with her before increasing or bonus, why spend much now? Do not be stupid.

Now what?

Continue doing what you're doing better and if you can. The temptation to buy what they can not afford never disappears. Over time you will also refine their ability to distinguish a want of a necessity, which helps financially and avoid new debt. Keep up to date with new investment strategies, the study on how they work and what are their statements, and not be silly.