North Americans today have higher levels of personal debt together with lower rates of personal savings than has ever been recorded before. One would think that in the light of these personal circumstances it would be reasonable to expect one to buckle down and ensure that you do everything in your power, easy or difficult, to erase debt. As you prepare to climb the stairs to setting your financial house in order, you would certainly want to explore how far the best pain-free methods could take you. However, this can only really be followed if you aren’t in a desperate hurry to get out of the red. Small sacrifices over time will only make big inroads if you give it a lot of time to work, although we may be talking about a time frame of a few years. Time is often a luxury that families in debt don’t have. For some, the retirement age is fast approaching and for others they find that they are servicing their debt with so much interest that they are in over their heads
If you can catch the downward spiral soon enough and are not in too much of a hurry to turn your boat around, there are some steps you could take. The sacrifices may be large, but in the long run, worth it. The first way is to look again at that age old advice that urges you to save 10% of your income every month. If you want to honestly attempt to erase debt as quickly as possible and arrive at a place of relative sanity again, you probably know that you can do better than just 10%. Why not try 40% of your take-home pay. 10% is for the lazy saver. If you are serious and willing to work extra hard toward financial health, learning to live on half your monthly income is what would actually get it done. Of course, a house purchase is one of the biggest areas to take caution on. If you are over indebted here, you will not have any money for saving.
For many years, the rule of thumb for buying a house has been to purchase the biggest house you can afford. It has been acceptable to stretch yourself and set aside a third of your monthly income to mortgage the best house that you can. Well, in today’s financial times we can consider those to be old rules. If you are in need of getting your financial ship on an even keel, what you really want to do is to sell the large house that you currently live in (that’s hoping you can get your moneys worth on it) and move onto a property much smaller and more affordable. This is where you could find that your experience in a college dormitory could teach you something. It is not too tragic that a small family should try to change their living standards to a small two-bedroom apartment. Perhaps the new rule is that you can have breathing room in your budget or in your house. But unfortunately you can’t have both.
Let’s see. You have given up your large house and decided to live in more cramped quarters. But that’s not all you need to change. The next asset one could turn to is your car. Is it possible for your family to get rid of your motor vehicle all together? There is no denying that cars are a great convenience. But with the list of bills that come with them one could list it as a luxury, particularly for someone who is seriously trying to eliminate debt. From the gas bills, maintenance costs, insurance premiums and parking charges, the costs keep coming. One could have a look at your area and begin to rely on public transportation. Looking at the positives, think of how all the walking will help you lose weight.
Other tips are to always try to buy good used items and ignore your plans to add new gadgets to your life. Cross off your list that Netflix subscription to go with your flat screen TV, premium cable, gaming consoles, as well as those ‘helpful’ devices that you need to buy apps for. All of these extras cost you hundreds of dollars every year. And finally, making sure that you unplug yourself from the commercial madness that Christmas has become should mean that you are well on your way. Ultimately all of these schemes are about pinching pennies. While it is true that this does stem the flow of cash out of your coffers, it does nothing to fill them afresh. Starting your own after hours business could then be a real way that you could see success in turning your life around. For finances on a lighter note visit Financial Humor.
