Reduce debt through the snowball strategy

One of the important ways you can reduce – or even eliminate – debt is the so-called snowball strategy. But what is the snowball strategy, you might ask. Well, this is how this strategy works:

• List all your debts on a sheet of paper, starting from the smallest debt going to the largest
• What is quite important is planning to pay the very least the minimum on all your debt accounts. What you want to avoid is getting hit by late fees and a strong and sudden increase in interest rates
• Now check to see how much you have saved to pay off your debts
• Next you need to pay the minimum payment as listed on your lowest pay-off debt and then use the extra money in paying off the debt
• As soon as you paid off your lowest debt, start working on reducing or even eliminating your second lowest debt
• Rinse and repeat until you have paid off all your debts

Although there are several strategies to pay off your debt, this is as good as any, and thousands of people have relied on this system to pay off their debts. It seems to work quite well for quite a few folks, thus it is worth mentioning.

One important use for this particular snowball strategy in reducing debt is for paying off credit cards. Actually it is the favorite method of paying off the credit cards. This way people will stay motivated to pay off all other credit card accounts, while using other strategies might not give them enough motivation to stay on course.

For other debt relief strategies, read this book.

3 ways to reduce personal debt

While generally debt can be a good thing, because it helps with getting that dream house, or car, or vacation, or gets your kids to college, excessive debt is something best to avoid. Excessive debt usually leads to problems such as unexpected costs that come up and you’re not able to deal with;  you run out of money fast; brings you only stress, grief and depression.

There are several ways to reduce personal debt, and here are 3 top ways to do that:

1. Reduce your credit card interest payment – if your interest rates are too high, switch to a credit card with less interest. Also put some of  your bills on standing order, so they are automatically paid, no matter whether the bills are lost in the mail, or you forgot to pay them, etc.
2. Find lower rates on house and car insurance – there are plenty of places to shop around online. Sometimes you get discount if you use the same company for both your car and your home insurance. Use that to your advantage. In some countries if you are above the age of 55 and you are retired, you can get a discount up to 10%. You just need to ask, as not all companies will disclose this information freely.
3. Reduce your variable expenses – there are two types of expenses: fixed and variable. Fixed expenses are those necessary ones that cannot be eliminated, such as mortgage, car loans, etc. Variables are those that you can touch and reduce: food, clothing, entertainment, utilities, vacations. Do you see here at least 2 areas that can be be used to reduce expenses from?

Your goal in doing these steps is to reduce your level of debt, to avoid bankruptcy, credit counseling services and possibly debt collection agencies. You don’t want to go down that road!

For more ways to reduce personal debt, read this book.

Trim your budget the easy way

We all know that to save money we need to spend less, however it’s not always so easy to see through the areas that need to be tightened a bit.  And unless you know where to look, or you’re well versed in budgeting, you won’t find them so easily.

Here are a few tips on tightening your spending:

• Many people have two phone lines at home, one a landline, and one a cell. You can safely cut one of the two and use only one. Alternatively try shopping around for companies that provide in one place with your phone, cable and Internet services.
• When shopping, buy in bulk. Buy generic brand names,  as they cost less (you don’t have to pay for the brand name, only for the actual product). Shop more often during sales, use coupons (particularly the combination of sales and coupons is very powerful), and buy only things you will need one week ahead, nothing that would spoil in your fridge because it was not consumed the week before.
• Pay off your credit cards as soon as possible. I mentioned here before that you need do this, and start by  paying off the heavy interest cards first. Once the first card is paid off, you can then go on to the next one.
• When holidays come, make the gifts rather than buy them. There are plenty of things you can make with your own hands, and people for a while now appreciate hand made gifts way better than bought one. They see them as more personal and having more value. And it’s only in your benefit that they cost less to do as well!
• For reading, or watching movie, borrow and rent instead of buying them new. Also make sure you return them on time, to avoid having to pay any late fees. Also there are some online book trading websites where you get used books for free from other reading enthusiasts, your only fees to pay are the shipping costs to the person who wants you book. Paying $2 for a highly wishlisted book beats paying $12 for a new hardcover! One of these online book trading places is Bookmooch, I highly recommend it.

Everyday money saving tips

Here are some tips from around the world, from people that found them tried and tested. You might already know some of these, but maybe you’re not actually using them? And many tips will be quite new to you. Make use of them and start saving money now!

• If you go shopping for food, make sure you eat first. It is never a good idea to go food shopping on an empty stomach. Why? Because you’ll always end up buying more than you’d originally planned. Hunger does that to people.
• If you smoke, give up smoking! Why? Because every cigarette pack costs a lot in the large scheme of things. And if you smoke at least a pack a day, you’re in for a big surprise when you start counting the money you give out every year for your smoke. Some people reported a saving of over $3000 a year only from not buying cigarettes anymore.
• When driving your car, drive evenly and don’t accelerate unnecessarily. Don’t off quickly from a start, because hard accelerating drains your gas tank quite fast. Make sure to keep a constant speed during long distance driving.  If you have a car with cruise control, use it to regulate speed. This is one of the biggest fuel savers around.
• If you have family or friends living abroad, start using VoIP to call them real cheap. If they also have internet access, you can speak for free as long as you both install software like Skype, or something similar. If you have to call them on their cell or their landline, talking VoIP is still way cheaper than calling them from your regular phone.
• Lower your gas and electricity bills by shopping around and switching to a cheaper provider. Also make sure you read the meter every time you receive your bills. It has been known for people to get wrong numbers instead of what they actually consumed.

These are just a few of the many ways you can save money everyday. Keep checking back as most tips on money saving will be posted regularly.

Four tips to live debt free

A most important motto that everyone should have in this new century is “the less debt you have, the wealthier (and happier) you’ll be”. The law of attraction is always in action, whether you believe it, or not. And I always say that following the laws in action are a good thing. Afterall, who would want to live in debt, in poverty and struggling every step of the way?

Having this in mind, it is true that a light debt luggage will ensure a more secure future and guilt-free spending on the things you want and the things you need. In the today’s society, living debt free is a feeling hardly known. People just cannot understand the joys of not having debt to darken our days. However, who once tasted the feeling, will never want to go back to living in debt!

Here are a couple of things you can do to start your journey towards eliminating debt from your life, and start saving money in the process:

1. Start tracking your spending habits, and determine the type of budget that suits you. You are the best to evaluate your spending tolerance level. However you need to keep in mind that without self-discipline the best of intentions fall flat. Remember those New Year’s resolutions forgotten after day 6 into the next year?
2. Self-discipline is also good for the following: reduce overspending, stop wasting your money, eliminate ‘compulsive’ from your vocabulary. Eliminating these from your immediate life, will greatly enhance your efforts at eliminating debt from your entire life.
3. Saving money strategies are in the right place here: on groceries, on dining out, make frugal recipes, on reading books (you have a library, right?), frugal gift ideas, cheap holidays, reduce energy costs, save on gas, etc. There are plenty of things you can do every day to save money, which in turn will help you with reducing your monthly bills.
4. Rinse and repeat. Do this every single month. Start tracking your spending, start watching what you’re paying more for what you could pay less, start saving money, and add into the mix a healthy dose of self-discipline.

Using these tips interchangeably will come a long way towards eliminating debt from your life, saving money and becoming wealthier in the process. You don’t have to start big. Do baby steps, but the important thing is, just do it (like Nike says). Don’t procrastinate. Start now, and once you will get into a habit of doing these things, you will wonder how were you able to live with the high debt and guilt all the time before. You will see, it will simply seem unimaginable after a while, like a bad dream.

For further ways to reduce your debt, read this book.

How to Budget Your Money

One of the important aspects of saving money is budgeting it. If you’re spending more than your saving, well, you aren’t doing yourself any favors in your quest to save money! You really need to calculate everything you’re spending, down to the last cent, because as I’ve said before, it all adds up.

But how can you actually budget your money, what are the steps for it? It’s easy to say ‘count your spending’, but not so easy to implement, unless you know what you’re doing.

• Calculate what income you’re getting – not only from your regular earnings, but any other income, such as coming from savings interest, child support (if any), tips, overtime money, anything that is considered ‘extra’.
• Make sure you can identify all your expenses – this includes housing, utilities, taxes, house repairs, extra purchases (cars, computers, etc). Keep every single receipt. Now it is a good time to learn an efficient filing system (buy a cheap binder where you can save all these papers in).
• Now you need to compare your income with your expenses – What is more, income or expenses? If income is more, you’re on the right track. But if expenses are more, this is where the red flag should come up, as this is where you need to start saving big time, by cutting back on extra spending.

Unfortunately there are so few people who ever think of budgeting, which is pretty much why there are so many people in debt. Very few of them realize that they spend too much on worthless expenses, because they are not budgeting and don’t see the forest from the trees, as they say.

Pay Off Your Credit Cards

By way of managing your money, a very important aspect is paying off your credit card(s) fast. We are all used to make the minimum payment on our credit cards, however this means that the interest is quite high, which in turn means that it will take you literally years to pay off your credit card.

What you can do is add a bit more to paying every month, as much as you can comfortably afford. Remember that you are saving money from your grocery shopping, from around the house, so you can use that money to pay off the credit cards as fast as possible.

Work on one card at a time. Start with the card that has the highest interest, and in the meantime just use the minimum payment on the other cards, so you don’t fall behind. Put the majority of your money in the high-interest card. As soon as the card is paid off, go on to the next card that has a higher interest than the rest. Faster than you’ll know, you will have paid off each card, instead of struggling to manage juggling between multiple cards and seeing no end to the nightmare at all!

Watch this video to find further financial tips for 2009.

Save Money at Home

There is much you can do for saving money in your own home. And as we all know, every bit counts. From saving on electricity, to saving on water, to saving money on home made sandwiches, it ads up. Studies have shown that a family of 4 can save around $200 a month only from these small things around the house only. Put this together with other types of savings you are learning here, and you will find yourself over the hurdle in no time!

Did you know that home made food costs usually less than food bought? If you make sandwiches to your kids to take to school with them instead of giving them money to buy their own, you will save money. Five times a week adds up indeed. Make them some delicious sandwiches that they will eagerly eat, and they will never ask for food money again.

Don’t forget yourself out of the picture!  You have to eat during the day as well, right? Prepare in the night, or early in the morning sandwiches for the whole family, and if you count everything you put in it, you will find that you will save per day at least a good $5, if not more. Now add that to 5 working days a week, and that’s a nice chunk of $100 every month. Count that up for a year, and start putting that $100 a month in the bank for darker days.

So from now on start looking around your own home for ways to save money. See everything from a new perspective, like seing from a different pair of eyes. Don’t take anything for granted, and you will start noticing things you haven’t until now, and you will be glad you did, as this will allow you to truly save money at home!

Money saving with coupons

Saving money doesn’t need to always be on a grand scale. Believe me, every tiny bit helps. I’ve been there, done that, and finally got out of it alive and well. So you can do it too.

One of the things I learned early enough to do is to hunt for coupons online and offline.

For offline coupon, check out your newspapers. If you’re not sure where the coupons are, definitely buy the Sunday newspaper, in most countries all over the world, coupons are included there. Take your scissors and cut out your coupons. Even those that you think you’ll never use. The main idea here is to have as many coupons in one place, so when there is a big sale somewhere, you have all your coupons ready to go and use!

You could do this with your whole family. Everybody has different hobbies, interests, tastes, etc. Some family members might want to use coupons that you’d gladly overlook.

For online coupons, there are several websites that offer just that: coupons for saving at most of the online stores.

For example, this is how many people get discounts at Godaddy, Namecheap, etc, where they can buy a domain for a year with at least $1 or 2 discount of the regular price.

My personal favorite, this is how I got some really great 20% coupons for Amazon purchases when I went to college and I had to pay for my tuition books. And trust me, tuition books ARE expensive! You can save a lot when using online coupons. One of the main sites I regularly use for coupons is Retail Me Not. Make sure you keep checking it at least on a weekly basis,  you will save lots!

Why do you need to save money?

Besides the obvious reason, the ability to save money is crucial in building up your wealth. The most important aspect of saving money is to spend less than you usually earn. Yes, it is very easy to say but not so easy to do, so this site will offer you several ways to do just that: save money to survive on the tightest of budgets – having the ultimate goal in mind: to increase your wealth!

Here are just a couple of things to get you started and make you think.

1. Build up your emergency fund! – did you know that 80% of the regular folks just like us, don’t actually have an emergency fund set aside? We all work for a living, and live from our earnings, and sometimes we are shortsighted enough (or naive enough) to think that this situation will last until our old age. Wrong! We can never be sure what life has in store for us, and being prepared for the worst, or at least the unexpected, will save us from lots of headaches (to say the least) later on then the tough is going rough.
2. Cut your extra spending – but you might say that you already do that! Well, sometimes the small things do add up, things which we take so much for granted that we don’t realised that we could save even more! Try to see your daily activities with fresh eyes, and see where your next dollar is going. Do you really need to spend it, or you could live without that extra something that you were just about to buy?
3. Create an automatic saving plan – there are just too many expenses in our daily lives that we can’t always oversee, so creating an automatic saving plan is just the ticket to catch any ’spending leaks’. For example you can use direct deposit to leave a small part of your paycheck in there. Set up an automatic transfer of an x amount of your paycheck to be sent to this direct deposit account the very same day your salary comes in. This way you won’t even notice the difference, but you will notice later on when these funds are there when you will need them in a serious emergency!

These are just a couple of basic ways of saving money to get your mind working. There are plenty of money saving posibilities out there, and next articles will focus just on showing you how!