All over the world people think they are stuck in their financial rut and that they have no way to get out of it. They are working long hard hours and they are still in debt and they begin to feel helpless, hopeless and frustrated. The only way out of debt is to gain true financial freedom by working diligently on the situation. Learning about your money and how to handle the money you have is only the beginning.
If someone has debt, it has to be dealt with. No matter where it is from, student loans, credit cards or medical bills, it must be reduced and eliminated entirely and this must be a priority. Once you’ve accomplished this, you can then begin to save money for your goals.
When you’re making loan payments, they must be paid in a timely fashion. This helps to prevent late fees and to keep your credit score up. Making just the minimum payment will lengthen the debt as you’ll wind up paying more in interest each month. Also, be aware that some companies will give an early repayment penalty fee so check on this before paying things off.
Interest rates on debt are an amount that the bank and or other lending organizations make their money. For this reason, repayments will be more than the actual debt itself. The longer you take to repay a debt, the more money you’re giving the company in interest. Another way they make money is late fees. These companies can charge a lot of money on late fees so make sure you’re paying on time every month to eliminate this fee. The sooner you pay down a loan or debt, the fewer fees you’re going to be charged. Now you’re on your way to financial freedom.
Many find that it’s best to pay off high-interest rates first and then pay the other debts. This works well for most.
Once you’ve cleared your debt, you can start to save money for other things like retirement.
The best place to save your money is into an online savings account. These accounts work just like your regular bricks and mortar banks but with a little higher interest rates. This way your savings keep up a little with inflation.
If you currently have debt then start out by putting together a budget and a debt reduction plan. This way you can get that extra debt out of your life and start using the money you were paying toward interest.
If you are now out of debt, you will want to put together an emergency fund. Having money saved for a rainy day will make sure that when the rain comes you do not have to turn back to debt to take care of it.
Once you have an emergency fund, then you will start saving for retirement and known upcoming expenses. This means that when the tires on your car go bald you will have money ready to go to take care of that. This way the emergency fund only gets used for real emergencies.
After that HAVE FUN!