Financial literacy and management are extremely important. Just because you have a high-paying job at the moment doesn’t mean that you’ll be set for life. If you have debts left and right and have nothing saved or invested, you need to take a long, hard look at your priorities.
You can seek the help of a mortgage company in Tempe for paying off bank loans and consolidate your debts. This will help lower the amount of interest you have to pay on all your debts every single month. Aside from this, you can also take the following simple but effective ways to start saving more and become financially independent.
Set a Monthly Budget
Sit down and write all your monthly expenses vis-a-vis your income. Make sure that you don’t spend more money than what you actually have. Overspending is among the top reasons people incur debt. Know what is coming in and going out your accounts and wallets each month. Make sure that whatever happens, your income must always be higher than your expenses.
Get Rid of Your Credit Cards
From now on, make it a habit not to use a credit card when shopping or dining out. Use only cash or your debit card whenever you make a purchase. Start by taking your credit cards out of your wallet so that you won’t be tempted to use them next time.
Have an Emergency Savings Fund
With discipline, you can save up to $1,000 real fast, and this will be your emergency account. Regardless of debts, bills and other obligations that you have, set this amount of money aside on a savings account first. As you work to pay off your debt, your emergency savings account will prevent you from further swiping your credit card when an unexpected event happens, like when the roof leaks, your water heater suddenly dies, or your car breaks down.
The emergency account is not your “fun or leisure” money and should never be used for stuff things that are not necessary in your daily lives. Set a separate budget for “entertainment” purposes, such as shopping and travels.
Make a Share on Your 401(k)
Ensure that you contribute to your 401(k) to match your employer’s contribution. Often, your employer will match your contribution up to a certain level, which is usually a certain percentage of your salary. If, for instance, your employer matches 40% of the first 4% contributions, then add 4%. If your employer matches up to 5%, then add 5% too.
The perfect return on your money is a risk-free match from your boss, so take full advantage of it. If you currently don’t have 401(k), or an employer match, forget this step. You should only be working on this if you have $1,000 worth of savings in your emergency fund.
Pay Off All Your Debts
Begin by listing all your debts, minus the mortgage for your home. Home loans usually have long payment periods and smaller interest. Your list of debts must include credit cards, car loans and other loans. Place the debts in order from largest to smallest.
Now, start by making minimum payments on all of your outstanding loans, except for the smallest one. On this one, pay as much money as you can every month and get it paid off as soon as possible. The moment the first loan is paid off, follow the same step and do so on your next outstanding loan. Rinse and repeat until you reach your last loan, and all loans are entirely paid off.
You’ll only be left with the mortgage loan then. You can then start paying more than the required amount so that your loan will be finished faster. The important thing is to work on these steps slowly and be consistent.