Budgeting Tips - Paying Off Debts To Save More Money
There are many ways of getting out of debt
There are many ways of getting out of debt. Most of these methods end up putting a negative record on your credit score. The best method therefore should be one that gets you off debt without staining your credit score. In this article we are going to be discussing how to use simple budgeting tips to pay your debts and save more money at the same time.
You are facing a lot of difficulties with the bills you already have, and here I come saying the way to get out of it is to save more. The method I am going to teach you works and is guaranteed to work for you if you will be committed to make it work.
Let us start with basic budgeting. First get a realistic understanding of your current situation - how much comes in each month; how much you spend; and how much you can save. You have to really work on cutting how much you spend every month. Paying off your debt means cutting your spending immediately. Cut off as many of the things you can do without as possible. You can get more detailed help on budgeting to help you.
Now youre saving more money and you have the cash to make this plan work.
1. Make a list of your debts in order of interest rate, from highest to lowest.
2. Subtract the minimum interest on all your loans from your savings.
3. Use the remaining money to pay a bit of the principal on each loan starting with those with the highest interest.
For example if you pay $20 on a 12% interest $1000 loan, it will take you 67 months to finish paying with a total payment of $1,353.43. On the other hand if you pay $40 monthly on the same loan you will finish the payment in 27 months paying a total of $1,103.28. This gives you a savings of $250.15 and 40 months debt free.
Paying more is therefore saving more. You have to stay motivated to make this plan work. It is easy to decide to start, but it is hard to keep doing it on a long-term basis. Set goals and reward yourself each time you achieve a certain amount of debt reduction.
Check out the link below Debt Information Center the internet's No.1 center for free information on debt management and consolidation.