Your Debt
Checklist
A Debt Checklist is the only sensible way to
organize and control your finances. Most people
aren't actually aware quite how much debt they
possess - in fact, a recent survey found that
almost 75% of UK adults were up to £5000 out
when asked to estimate their non-mortgage debt.
They weren't much better when asked to produce a
cashflow statement showing how their hard earned
cash was being spent each month!
A Debt Checklist is a plan you can use to get a
grip on your finances, and will allow you to
understand in black and white, where savings can
be made, and how debt can be tackled most
effectively.
Obviously, you will have a savings account. If
you DON'T, go open one now. Choose a large,
reputable bank or loan company so you won't have
any problems getting access to your funds when
you need them.
Secondly, you need to cut back on your credit
card spending. Credit card companies do
everything they can to encourage you to spend,
and even more to try and cajole you into only
paying off the minimum each month, making credit
cards the MOST expensive way to borrow money you
are ever likely to come across. If you find
yourself paying for 'small' items with a credit
card, you are asking for trouble. Not only will
you be that annoying person in the front of the
grocery queue at Walmart paying by card, but you
will also rapidly lose ANY idea of what you have
spent, and where. Debit cards are SLIGHTLY
better than credit cards for these small
purchases, but not much - you will still face a
terrible temptation to spend more (up to 50%
more than paying by cash, if recent surveys are
to be believed!)
You MUST pay more than the minimum payment each
month - if you don't your debts will be around
for a LONG time! It can take over 20 years to
pay off a measly $1,000 credit card bill if you
simply pay the 2% minimum each month. At the end
of this, the interest payments you have made
will FAR exceed the original debt! And that, of
course, is how credit card companies afford
those swanky downtown offices.
If you have dependents, you need insurance. It
may seem like an extra cost right now, but
believe me, it is 'Murphy's Law' - if you don't
have it, you will need it imminently! Auto
insurance, Mortgage Payment Protection, house
insurance and life insurance are a basic set you
need. This point is related to pensions, too.
Start as early as you can. If you don't have a
pension plan now, start it immediately. The tax
advantages just can't be missed. And the earlier
you start, the sooner compounding has a chance
to work it's magic. And compounding is the
secret that will determine if you have a
comfortable retirement, or live in a shack,
eating beans. And don't try and kid yourself you
won't make it to old age - bet you will, and bet
you will be surprised how expensive everything
is in 30 years!
Read up on money, and money topics. If you
understand how cash works, the chances of
getting into serious debt decrease dramatically.
I'm not saying you have to read the Wall St
Times, but an understaning of interest rates and
compounding won't hurt.
That's about it for now - Get saving
This article is the property of
www.1st-in-homeloans.com, which has been
offering home mortgage services since 2002. To
find out more visit
www.1st-in-homeloans.com
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