Are you making a living from paycheck to paycheck with almost no savings and a colossal credit card debt? When you are already on loan, it can get even harder, making savings or living the life you’ve always imagined becoming increasingly tricky.
To ensure that you get everything right financially while you are still in good credit, here are a few simple steps to get you started. It won’t be long before you will be finally able to achieve the financial freedom you have always longed for.
1. Minimize credit card usage
You need to cut up your credit cards. If you’re still carrying a credit card in your pocket, the urge to use it can be extremely high. Thus, seek to remove it.
Use only one credit card or cash for all of your daily expenses as much as possible.
2. Make a budget
Creating a budget based on your income and not your costs is essential. Remember that overspending is what led you to debt in the first place, and creating a budget would deter you from spending more money than you have.
Each month, decide your debits from your credits, and should you choose to boost your credit using a debt consolidation loan in Singapore, the budget would help you to stay on track. At all times, your income should be higher than or equal to your expenses.
3. Make starter savings
Regardless of the existential bills or costs you might be having, look to set aside at least $1,000 in your savings account. This can be your emergency account.
While you’re working on clearing up your debt, your savings will prevent you from wiping out your credit card in a minute. Whatever the reason might be for you to spend that money comes up, you shouldn’t use your emergency fund for anything predictable or avoidable.
4. Pay off debt
Make a detailed list of debts along with your interest rates. From student loans to car loans, credit cards, quick cash loans and personal loans, clear those debts starting from the smallest of them. If you say, have a $15,000 loan at 25%, and a $700 credit at 2%, the $700 should come first in your list.
Once you’ve made your list, focus all of your might on the first one as you make small payments to the others. Once you’ve cleared the first loan, start paying the second one immediately as you make small contributions on the rest until everything on your list is laid off.
5. Increase your emergency savings
Now that you have emergency savings to take care of your expenses for up to 3 months, increase these savings to accommodate six-month payments.
Make sure the money is safe and easily accessible by keeping it in a savings or money market account. No need to worry about the interest rate. Keep the money, in case you experience fluctuations in your income.
Achieving financial freedom is what everyone desires so much to attain. While it is pretty much theoretically easy to have more income than expenses, the practical aspect needs discipline, focus, and patience.
Observing the highlighted guidelines will help your savings grow tremendously and help you have a happy life in the future.