In Debt?
The following is a guest post.
Most of us have debt, but it doesn’t have to be the norm if you rather pay it off. You can get professional help with debt or tackle the problem yourself. With some willpower, a plan, and some automation, you can be debt free.
Track Your Income and Expenses
The first step to any money issue is to figure out where your money is being used. Track your income and expenses for a month or more to find out exactly where your money is going. This means keeping up with each and every expenditure. If you start blowing off the small stuff, you won’t have a perfectly clear picture, so write it all down. By the end of the month, you will have all of the spending information you’ll need to make a plan.
Make a Plan
You can use what you know from tracking your income and expenses to make debt management plans. The first step is to see if your income is covering all of your spending. If it is, then you can use your monthly extra towards debt. If it isn’t, you’ll need to cut your expenses or increase your income. Can your housing costs be decreased? Have you called your monthly services to ask for discounts? Do you have unnecessary expenses that can be cut?
If you decide to increase your income instead, look into a better paying job or a side hustle. Dog walking, pet sitting, baby sitting, or a part-time job at a local business can usually fit into any schedule. Take a look at all of your skills and see what you can monetize.
Tackle the Debt
Once your income surpasses your expenses, you can throw the extra towards your debt principal. If you make a budget to stick to, remember to include a category just for debt payoff. You can have it automatically applied or at least automatically moved into a different account to keep yourself from breaking your own rules. We are sometimes our own worst enemies.
If you follow your own plans and keep hitting your debt with any extra you can scrape together, you will soon be celebrating debt freedom! Good luck
Using insurance when you need it.
While people understand the purpose of insurance and its role in protecting us against disasters, we may be reluctant to use those benefits when the time arises. Probably because we are in the midst of disaster far less than from a standpoint of safety, people are hesitant when claiming for injuries.
A few years ago, we visited a friend in grad school. He happened to be close to the beach, so we decided to make a short day trip out to the water. But our trip was cut short at the major interchange right before a tunnel. At a standstill from the traffic, someone wasn’t paying attention and ran into the car in front of them. We ended up being part of a four car accident, with us the second to last car to be struck. The last car ran into the rear of the third car, which hit our car’s rear-end and pushed us into the first car’s rear.
Getting pinball’ed like that wasn’t fun, and needless to say, the accident put a damper on the rest of our day. Once we were back home, I noticed some shoulder tightness. During the accident, I was slightly turned around talking to the other guy in the backseat. After a few days, I decided to call my friend.
He said that his insurance would cover the medical bills of any passengers in the vehicle, including compensation due to whiplash. After speaking with his insurance representative, I scheduled a physical therapy appointment to work out the kink. It had something to do with the angle I was at the time of the accident, but the muscle issues were resolved after a few weeks of training.
As painful and debilitating accidents can be, it’s a comforting feeling knowing that insurance premium you pay each month will be there to absorb the shock of the event and get you back on track.
What CNN Can Reveal About Your Debt
How much do you really understand about your debt? You might look at your billing statements each month and notice your balances inching down, but that doesn’t mean you truly understand the impact of what’s going on or why you’re not paying your debt faster. Using CNN Money’s free credit card payment calculator, you can get some valuable understanding about what’s going on with your debt. All you need to do is plug your debt numbers in the calculator and evaluate different payment scenarios.
The Impact of Paying the Minimum
You’ve probably heard that paying the minimum on your debts is extremely costly – more costly than any other type of payment plan. To find out how costly, put your balance, interest rate, and minimum payment in the CNN Money’s calculator and choose the minimum payment plan option. You’ll see that it’s going to take several years and lots of interest before your debt is finally repaid. You can save hundreds, maybe even thousands of dollars, by increasing your monthly payment.
Save Money By Paying More
It sounds counterintuitive that you can save money by paying more money, but test it out. Use the calculator to see how much time and money you’d save paying off your debt if you increase your monthly payment by $100. In the fixed payment section, enter your current combined minimum payment plus an extra $100 and calculate. The result will undoubtedly surprise you.
