Note: This is a guest post from Timothy Ng. Be sure to check out his author bio at the bottom of the article.
The are a relatively simple and painless way to reduce debt and start to build wealth. They key to living well is to rid yourself of the added costs that come with having large debts and large interest payments. Once you have cleared your debt you can start spending money on things that make you really happy, or better yet start putting your money to work in interest bearing accounts.
The StepsStep One – Make the choice to live within your means. You probably do not realise it but there is a good chance you are spending more then you make by using credit cards. If you spend less then you make you will never again be in debt
Step Two - Categorise your debts. Some debt is OK to have, like a mortgage or a student loan. Other debts, like credit cards and personal loans are bad debts because they have no tax advantage.
Step Three – Contact your lenders about getting lower interest rates. You might be surprised to find that with just a few phone calls you can reduce your expenses by asking for lower interest rates. Even if it is just a few points it can come out to a significant amount of savings in the long run.
Step Four – Gather your bills together and come up with a plan. You will have to come up with a budget that allows you to pay the minimum payment on every bill as well as a big chunk toward at least one bill that you want to pay off first.
Step Five -Prioritise your bill payment schedule. There are a few different schools of thought when it comes to paying off debt. If you want to save the most money you should pay off the bill that has the highest interest rate first, moving on down the line to the one with the lowest rate last.
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