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Understanding Personal Finance
Everyone in the world deserves debt free living. In
accordance to statistics, mostly consumers spend
10%-20% more than their earnings and end up using
credits available to them to bail them out of debt
services and continuation of same lifestyle. The
bottom line is that one should never regret for
whatever has happened but should plan well enough to
combat back to debt free lifestyle. Life is too
short to curb your desires and spend carefully and
the approach should be to generate enough income to
fulfill all the desires. One of the foremost
approaches to handle debt is to identify the
outstanding credits and develop extensive budget to
come up with different strategies to pay back in due
course of time. In the United States of America
(USA), average debt per household has crossed
$20,000/- exclusive of mortgage financing.
Developing Debt Combat Strategy
Step 1
Identify outstanding debt from current credit card
bills and calculate the minimum payment due each
month with date in the next column
Step II
Calculate the principal payment and mark up from the
minimum payment due
Step III
Total your minimum payment, principal payment and
markup payment
Step IV
Forecast your outstanding position every quarter and
identify any income from other sources or bonuses
you might earn
Step V
Arrange your debt in ascending with higher interest
rate debt on the top. Make sure any other savings
should be addressed in ascending order
You have courage to pay all you owe- Have Faith in
yourself
Tips
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Keep your eyes open for cheap credit available in
the market to swap the higher cost
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Be
vigilant if the bank levies any miscellaneous
charges in the monthly bill
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Make minimum monthly payments as early as possible
to reduce the interest expense
Tips for developing Effective Budget
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Set aside 10% of your disposable income for
savings preferably investments in high risk-High
Reward stocks if you below 40 years old.
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Food expense should
not increase by 15% of your disposable income
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Emergency fund of 10%
should be invested carefully in highly liquid
investment schemes
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Split 10% of your
income into two times of luxurious dinning out
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Auto fuel and utility
bill should not exceed 10%
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Share your ride to
work with your colleague for reduce your fuel
expense by half
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40% of the income
should be spend on the rest of your needs
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Make sure any of the remaining funds should be
invested back to your debt since it will have
double the impact on your earnings. US$100 minimum
payment debt settlement into any debt means $1200
available annually to be spent somewhere else.
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