Personal Finance – Trying to Overcome Debt Before Starting Saving
When you have debt, every month you pay more interest than you can get interest in your savings, and you fall further.
If your financial situation increases, start contributing to savings and retirement again. But for now, you must place every penny you have on your essential living expenses and to pay your high interest in interest.
Moving your budget from red to black may require more than a budget cutting. The same applies if you are able to pay only a minimum because of your high-interested debt.
When you pay only a minimum every month, it takes months, if it’s not for years, to pay off the debts, and you pay hundreds or even thousands of dollars that are interesting for sterling that you can use better.
Increase your household income: Get a second job, change your hobby into a part-time business, or let your boss know that you want to work more. If your partner or partner doesn’t work outside the house, discuss whether the payment that pays makes sense, until your finances increase.
Negotiate with your creditors: Some of them may be willing to reduce your monthly payments or make other changes to help you continue to pay your debt.
Consolidating your debt: debt consolidation involves borrowing money to pay off high interest debt and reduce the total amount you pay for your debt every month.
Getting help from leading non-profit credit counseling agents: These agencies can help you develop your budget and can also suggest that you prepare a debt management plan.
Archiving for bankruptcy: Bankruptcy must always be your choice of last effort. When did it be your best choice?
o if you will lose important assets
o If your monthly fee is much higher than your income that it will take years of sacrifice and budgeting naked before your debt can be managed and you have a little extra money left every month
Financial experts agree that, in general, the cost of your basic lives and the total amount of debt you have (safe and unsafe) must be equal to no more than a certain percentage of your clean household income. (Clean household income is your income after deducting taxes and other expenses, this is your home salary.)
When you develop your budget, one way to determine the cost of reducing is comparing your numbers with the following percentage standards. When you have a budget, you can also use a standard percentage to monitor your financial situation from time to time.
If your percentage is slightly higher than the following list, you don’t need to worry because certain costs may be higher in the part of your country. Housing, for example, varies greatly from one place to another.
Some financial books and websites can also use a slightly different percentage of these; There is no set of correct numbers. The percentage is only around the amount for you to use as a spending guide:
Monthly housing costs: 25 percent of your clean household income (35 percent if you take
Into homeowners insurance, property tax, home maintenance, and repairs)
Consumer debt (credit card, student loan, medical debt, etc.): 10 percent of your clean household income
Utilities: 15 percent of your clean household income
Transportation: 15 percent of your clean household income
Savings: At least 10 percent of your clean household income
Everything else (food, clothing, health insurance, recipes, entertainment, etc.): 25 percent of your clean household income.
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