Given the rampant rise of household debt within the country, it is very hard nowadays to find a middle-class American without any amount of debt (whether in the form of credit card debt, student/auto loans, and/or mortgages). This scarcity of debt-free Americans is a growing problem throughout the country as increasing amounts of debt are reducing the financial flexibility of many domestic households.
For those of you interested in learning how to withstand this trend, below are some great tips to help you to live a debt-free lifestyle:
Set Up Automatic Deductions. If you are anything like most people, payday is one of the worst days of the week for you, financially speaking. The reason for this is because you are much more likely to spend more money on the day or so following payday then you are on any other portion of the week. There's significant truth to the notion of people living "paycheck to paycheck." If you wish to avoid your sudden urge to splurge the day you get paid, it's definitely a good idea to set up automatic deductions that get deposited directly into a savings account.
Personally transferring the money yourself is not as effective, it should be automatic. If you are manually transferring the money to a savings account, then there's a greater chance you will try to postpone the transfer thinking that you will save twice as much next week or the week after. Automatic deductions will help you to avoid this procrastination altogether, and allow for more consistent saving.
Block Off Excess Cash. Once you have enough money for an emergency fund (generally enough cash to cover for six or more months of salary), it's allows a good idea to block off some cash to prevent the urge from dipping into your savings account. A great way to do this is to put money into a CD account or other long-term restrictive account. By blocking off immediate access to your excess savings, you will feel less of an urge to dip into your savings for unnecessary big ticket purchases such a new car or television.
Pay Down Credit Card Debt. Before you even think about entering into the world of investing, it is absolutely important to ensure that you have little to no credit card debt. No matter what type of economic environment you may be in, it will prove to be very difficult for you to beat the 20%+ interest rates on outstanding balances on most credit cards. You goal should be to pay down this debt as soon as possible. Only then should you even think about starting to invest your money.
Start Investing. Once your credit card debt is at a reasonable level, it's time to start investing. Thanks to the rule of compounding returns, the earlier you are able to start, the more money you will likely end up with in the long run. For this reason, it's always a good idea for you to contribute as much money as you can reasonably afford towards investments. The investment vehicle you end up choosing is ultimately up to you, but I strongly advise that you do your research first. It's also not a bad idea to read about the different classes of investments before you get started.
About the Author: Ketul Kothari is an accomplished investor and entrepreneur. He is also the author of several popular business books including the Invest Your Way to Riches series. Ketul's upcoming book, Presenting Greatness, will reveal the presentation techniques and strategies employed by some of the world's leading presentation gurus. Follow Ketul on Twitter.
Article Source: http://EzineArticles.com/?expert=Ketul_A._Kothari
Article Source: http://EzineArticles.com/8277034
For those of you interested in learning how to withstand this trend, below are some great tips to help you to live a debt-free lifestyle:
Set Up Automatic Deductions. If you are anything like most people, payday is one of the worst days of the week for you, financially speaking. The reason for this is because you are much more likely to spend more money on the day or so following payday then you are on any other portion of the week. There's significant truth to the notion of people living "paycheck to paycheck." If you wish to avoid your sudden urge to splurge the day you get paid, it's definitely a good idea to set up automatic deductions that get deposited directly into a savings account.
Personally transferring the money yourself is not as effective, it should be automatic. If you are manually transferring the money to a savings account, then there's a greater chance you will try to postpone the transfer thinking that you will save twice as much next week or the week after. Automatic deductions will help you to avoid this procrastination altogether, and allow for more consistent saving.
Block Off Excess Cash. Once you have enough money for an emergency fund (generally enough cash to cover for six or more months of salary), it's allows a good idea to block off some cash to prevent the urge from dipping into your savings account. A great way to do this is to put money into a CD account or other long-term restrictive account. By blocking off immediate access to your excess savings, you will feel less of an urge to dip into your savings for unnecessary big ticket purchases such a new car or television.
Pay Down Credit Card Debt. Before you even think about entering into the world of investing, it is absolutely important to ensure that you have little to no credit card debt. No matter what type of economic environment you may be in, it will prove to be very difficult for you to beat the 20%+ interest rates on outstanding balances on most credit cards. You goal should be to pay down this debt as soon as possible. Only then should you even think about starting to invest your money.
Start Investing. Once your credit card debt is at a reasonable level, it's time to start investing. Thanks to the rule of compounding returns, the earlier you are able to start, the more money you will likely end up with in the long run. For this reason, it's always a good idea for you to contribute as much money as you can reasonably afford towards investments. The investment vehicle you end up choosing is ultimately up to you, but I strongly advise that you do your research first. It's also not a bad idea to read about the different classes of investments before you get started.
About the Author: Ketul Kothari is an accomplished investor and entrepreneur. He is also the author of several popular business books including the Invest Your Way to Riches series. Ketul's upcoming book, Presenting Greatness, will reveal the presentation techniques and strategies employed by some of the world's leading presentation gurus. Follow Ketul on Twitter.
Article Source: http://EzineArticles.com/?expert=Ketul_A._Kothari
Article Source: http://EzineArticles.com/8277034
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