Six Steps to Paying off Debt and Investing in your Future

canstockphotoIf you were to lose your job tomorrow would you have enough saved up to pay your monthly expenses? What if you were to retire next year or the year after, do you have enough money saved up to cover your expenses and any medical bills that are likely to arise?

Consumer debt has taken control of many budgets. If you are struggling to pay off your debt and wonder how you can possibly save for the future when you have so many bills to pay, don’t lose hope. Learn to take advantage of financial support programs to help with current finances and start learning positive financial habits. Overtime you will eliminate your debt and begin accruing money which you can invest for your future.

Here are six steps to help you on your way:

1. Ditch the credit cards and stop taking out loans:  The most important thing you can do first is to stop accruing debt. So stop spending money you don’t have. Don’t take out a car loan. If you have to buy a junker until you can save up money for a better car, do it. Or better yet take public transportation and skip the insurance and gas payments.

2. Save up an emergency fund: Start saving enough money to cover at least one month of bills. Keep making minimum payments on your debt until you have saved up at least $1,000 to use in case your car breaks down or you have unexpected medical expenses. Having an emergency fund at hand will ensure you don’t have to rely on credit cards when the going gets tough.

3. Pay off your smallest debt first: Put anything extra you have towards paying off your smallest debt. (Sell things, use tax returns and cut back on extras). Once you have your smallest debt paid, you’ll feel a sense of accomplishment which will help you stay motivated. As soon as that debt is paid off take all of the money you were paying towards that bill and pay it towards the second lowest bill until it is paid off. Continue stacking the funds until you pay off your final debt. This is commonly referred to as debt stacking or the debt snowball.

4. Don’t fall into bad habits: Once your debt is paid off, don’t go back to spending a ton of money. Consider building up your emergency fund a little bit more and using the rest of the money to invest elsewhere. Have a plan for how to use your money so you don’t start spending irresponsibly.

5. Invest wisely: When you are planning for retirement, investing wisely will help ensure you have enough money when you need it. Talk to a professional planner or fiduciary, but also learn as you go, your money is ultimately your responsibility.  Ideally you should avoid putting all of your money into one investment, diversification is key. Check out annuities, mutual funds, shares, real estate among other financial investments.

6. Reward yourself: Paying off your debt and beginning a retirement fund is hard work! Plan a fun reward for when you get all of your debt paid off. Consider a fun vacation or a nicer car. Remember to pay for your reward in cash! Once you’ve paid off your debt you may want to keep 20 percent of what you were paying towards debt for extra fluff to your account and use the rest to invest in your emergency fund or your retirement account.

Hard times may come in our lives where we need some cash to fall back on.  By taking a few steps today, we can enjoy better tomorrows.

Australians Are Still Struggling with Massive Credit Card Debt Issues

httpwww.onmoneymaking.comAlthough the recession has put a brake on the Australians addiction to plastic fantastic, it seems like the latest figures released by the Reserve Bank indicate that credit card debt remains an issue. According to the data issued forth by Australia’s central bank, Aussies are still amassing a massive amount of debt, currently standing at $50 billion. The past two years have seen the level of credit card debt oscillating between $48 and $50 billion – a large amount, by all standards, yet still nowhere near the impressive levels of the three decades that preceded the recession. That span of time saw the level of credit card arrears grow by 28 per cent each year. And while the global financial crisis has made consumers more aware of the impact that credit card debt can have on their lives, it’s likely that both past attitudes and current market regulations continue to influence the way Australians manage their arrears.

Aside from the cold, hard facts that the central bank made public, it seems that commercial banks are also contributing to the problem. The recent credit card reform in Australia has made conditions for inquiring credit card owners about credit limit increases more strict. Nowadays, a credit card holder can only receive an offer for a credit limit increase if they have specifically agreed to be handed such offers. However, they do still receive them, and often enough to actually buy into them. After all, it seems innocent enough: the bank agrees to let you spend more money – but if you’re cautious enough, there’s no need to end up piled-high in debt because of over-spending. What can go wrong?

Quite a lot according to mortgage brokers, including being denied your home loan. The bank’s take on your credit limit is that, the higher it goes, the more likely you are to have trouble in paying back your mortgage. This is especially true for mortgage loan applicants who have several credit cards and who do not spend up to their credit limit. The advice from Bankwest Credit cards is for credit card holders to be on their ‘best behavior’ in paying back the credit in time and in full, while also limiting their number of owned credit cards to the absolute bare minimum.

The way things stand right now, with many consumers seeking to lower their debt, it still looks like Australians are a long way away from paying off their credit card debt in full. According to a December survey, carried out by a banking product comparison website, some 11 per cent of the people polled acknowledged they were only making minimum repayments of their credit card debt each month. That means roughly 1.7 million credit cards are still largely unpaid for – and it’s going to take a lot of time to fully cover
that debt. A spokesperson of the website that carried out the poll said that, at an average minimum monthly payment of 2 per cent, with an average balance of over $3,200, it would take holders almost a quarter of a century to fully pay back their credit card purchases. On the one hand, that means the holder would be paying more than double the balance in debt alone. On the other, it draws attention to an even more jarring fact: paying off a credit card in full could take 24 years and 5 months, well over the average time span for paying off a mortgage.

Do you need to look closer at your gambling habits?

canstockphoto8590868Gambling is, like many other vices, one of those things that people need to keep a watchful eye on.
It can be very easy to see your gambling get out of control and, before you know it, you could be suffering from large amounts of debt. This doesn’t necessarily mean that betting has to be off limits; it’s more a case of ensuring that things don’t get out of hand and lead to the need for IVA advice. So, for instance, if you find yourself gambling sizable amounts of money every day then it may be time to try and curb things. Done in moderation, betting can be enjoyable, while also bringing in a bit of extra cash into the coffers but, it’s essential that gamblers don’t go overboard and risk losing everything.
Quitting while you’re ahead is the mantra to follow.

Gambling machines

There are plenty of different forms of gambling, all of which have obviously inherent risks involved.
One of the main troubles that come with automated machines is that they are located in various locations, from service stations to airports to pubs, meaning temptation is always there.
Furthermore, as these usually operate on small denominations such as ten or 20 pence pieces, it can seem as though you are losing less then you actually are. It’s a topical issue too, as recently the government launched a £500,000, 18-month-long study into the effect of gambling machines on members of the public. It is being carried out by Responsible Gambling and the results of the study could well influence whether or not government action is required.

In-play betting

This is also known as live betting and is seen as one of the latest and greatest advancements by betting firms, as it allows people to bet on games and sporting events as they happen.
Next goal time, scorer and team markets are all available and this can present a danger for those who struggle with gambling due to the range of options available. As things go, this is one area where it’s so important to keep a handle on your betting. The instant nature of this type of gambling means you can lose sizeable amounts quickly, with many hurrying then to put a big stake on to try and win their money back. Rushing into bets and placing big stakes is not a sensible way to go about things and, no matter how experienced and knowledgeable you are in terms of what you are betting on, it’s imperative to take your time and think calmly.

Have a betting budget

One way of keeping a tight handle on your gambling purse strings is to have a specific budget.
So, if you have an online account, deposit a small amount and then work solely from what you accumulate. Start off with £5, or a similarly small fee, and see if you can build that up over the course of time. Not only will this get rid of the need to withdraw money from your bank account, it could also boost your income in a small way too. Obviously, there’s no point simply gambling all the money in this pot away quickly and refilling it with money from your bank account, so set a limit on how often you are allowed to put money back in. This will force you to be sensible with the amount you gamble and how much you bet on.

Ultimately, the best way to see whether or not you are gambling excessively is to take a step back and look at exactly how much you spend each month in this area. Look at how successful you are and also consider your motives for this level of gambling. Is it becoming a compulsion, rather than something you enjoy to give you a small buzz now and again? If so, it’s important to cut back completely for a while or seek professional advice. Gambling is something that affects people in many different ways and, while some can cope with little and often, for others it becomes an addiction that can quickly lead to a debt spiral. It’s not only addictive because of the initial enjoyment but also due to the desire to win lost money back, so ensure you don’t take it lightly.