Finding yourself with a mountain of debt can be a frightening time and it’s easy to feel that getting yourself free from debt is out of reach. While you may feel temporarily panicked, the good news is that with careful handling, debt can be easily managed – the key is to start small.
If you entered yourself into a marathon, you wouldn’t simply throw all your energy into the one day and hope for the best. You’d train yourself by starting with a small run and as your fitness improved, you’d increase the distance. Once the day of the marathon arrived, you would feel confident that you had prepared yourself and that confidence offers the motivation to finish. The same method can be applied to debt.
We’ve all experienced a time, if not many times, when we pop to the shops to purchase a few goods only to return home with bundles of bags and a multitude of items we didn’t set out to buy. Perhaps the boss was a little extra grumpy that day or the kids were overtired. Maybe breakfast had been skipped or boredom had well and truly kicked in. Whatever the reason, overspending was the result and if it happens too often, finances can quickly dwindle.
Syble Solomon, executive coach and creator of Money Habitudes, has an acronym she believes people should always consider when out shopping: HALT.
Saving more money is a common goal, but many people find it challenging to achieve their savings target. By setting realistic saving goals and developing good money habits, anyone can learn how to save more money.
Track what you spend
Most successful savings strategies starts with your being aware of all of your incomings and outgoings. A budget is the best way to monitor what you’re spending your money on. You can create a simple budget by downloading one of the many simple spreadsheets or word-processing templates from the Internet. Alternatively, there are apps designed to help you track your spending. Try to update and review your budget at least once every fortnight.
Loans can be excellent tools for achieving your purchase or investment goals more quickly. However, every loan comes with accumulated interest payable by the borrower. As such, the sooner the borrower repays a loan, the more they will save on the costs of the loan. You can pay off a loan faster if you save more, pay more often, and budget effectively. Here are some tips:
Lump sums and windfalls
Use any lump sums or windfalls to repay your loan. Instead of spending the proceeds from a lottery win, your tax return, or selling your car, use the extra money to pay off your loans and save on interest.
It is never too early to start thinking about retirement. By planning early and having a well-defined retirement plan, you’ll have adequate income to maintain your lifestyle and fully enjoy your retirement years. Retirement planning can be a complicated process that involves financial management and a clear savings and investment plan, so here are some steps to help guide you through.
Step 1: Find out how much you need for retirement
A starting point is to determine how much you’ll need for your retirement years. How much you need will vary depending on your preferred retirement lifestyle, but the ASFA Retirement Standard serves as a useful benchmark or guide.
A mortgage is a non-deductible expense that takes up a considerable proportion of the typical household budget. As such, it’s a type of debt that should be paid off as soon as possible. Homeowners can reduce the term of a 30-year mortgage by decades and save hundreds of thousands of dollars by managing their expenses and making more repayments. In the end, paying off a mortgage faster frees you to do more things with your money.
1. Use a budget
A budget sets a solid foundation for making extra repayments and managing expenses. Create a realistic budget, record your expenditure, and regularly review the budget. Check your weekly expenses to identify where you can save more money to divert to your mortgage.
Financial advisors often recommend that their clients create personalised savings plans, and for good reason. A savings plan can help you to focus on your goals and motivate you to achieve them by encouraging you to manage your expenses more successfully. These step-by-step instructions outline the essential steps for creating a savings plan, whether you’re saving for a major item such as a deposit for a new house or a smaller expense such as an overseas holiday.
1. Identify the goal
Start by identifying what you want to buy or achieve. For example, you may want to grow your retirement funds, pay off your credit cards, or buy a new car. List all your goals and categorise them as ‘short term’ or ‘long term’. Define these goals in detail so you can accurately work out how much you’ll need.
The start of a new year is an excellent time to review your financial plan for the coming year and beyond. The secret to hitting the mark on your financial goals and resolutions is to take the time to plan a budget and to consult it regularly to track your progress. This guide shows you how to revitalise your financial situation and achieve your financial goals more quickly.
1. Learn budgeting basics
Good budgeting involves setting financial goals, tracking your expenses, reviewing them, working out what you can cut back on, and learning to manage your spending so you achieve your goals. Set up a budget and ensure that it is as detailed as possible. Then match your budget, including your spending and savings targets, to long-term goals such as buying a new house or car.
Knowing how much to borrow is crucial when it comes to buying or building a home. Before meeting with a lender or mortgage broker about getting a home loan, it’s important to know how much you can afford to borrow and repay.
The following looks at how much you can borrow:
Before you start looking for a home, you need to consider whether owning a home is financially viable for you by taking your income into account. By considering how much you earn, you can avoid choosing a house that you can’t afford in the long run. It will also help you determine the amount you can pay for the deposit and monthly repayments.
Getting fast cash loans for unexpected bills and expenses that come up can solve your financial worries. If you have no credit, you may think of getting a payday loan, which has low fees. However, they have very high interest rates, such as at an 800% annual percentage rate (APR). You also have a higher risk of losing your car or property that was put up as collateral against the loan.
Here are some of the ways you can get a good fast cash loan:
Short-term loans have high interest rates and fees. If you can pay back the loan with your next pay cheque, you don’t have to pay much interest in the long term.