Wednesday, October 26, 2011

Smart financial habits you should practice to eliminate debt

Money management is an essential skill that most people don’t pay heed to. As a result of this a vast majority of people in our nation ends up in debt. Being in debt can be immensely stressful, as you have to keep up with your multiple debt payments along with creditor calls at all times of the day. However, you can practice some essential money management skills in order to ensure that debt elimination occurs. These practices are explained below.

1.Set a money management goal – You can achieve an end that is debt elimination through the means of money management. In order to achieve this end you need to make your goal practical. Don’t put up large money management goals such as having a comfortable retirement, which is a long time away. Start with small things like managing your credit cards or paying off your credit card bills within a particular number of months or saving a particular amount of money by the end of that particular year.

2.Track your income – It is necessary for you to keep a track of your income. Find and observe your old check stubs and add them up and divide them to find out your average income per month. In order to know your earning power more accurately, add your pay stubs for a quarter of a year and divide it by the number 13 which is the number of weeks in a quarter.

3.Track your spending – After tracking your income, sit down to track your spending. Keep a small notebook in your purse and make a record of everything that you buy. This might need some times as you need to record your expenses for at least a month. In this way you will come to know where the money you earn goes.

4.Pay bills on time – This is an absolutely necessary step of money management. If you don’t pay your bills on time, you invariably have to make late payments. In this way your credit card statements will be made simpler too.

5.Pay more than the minimum amount on your debts – It is necessary for you to pay more than the minimum amount on your debts to get out of debts faster and save money in the longer run.

You will see that by following the above money management tips and saving, you will be able to eliminate your debts.

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