The secret of peaceful and happy life is to reduce your debts or eliminate them completely.
You should also be saving simultaneously and keep investing the saved amounts regularly in instruments that are safe but offer higher yields.
The following tips should help you in reducing or eliminating your borrowings and starting the habit of saving.
Analyze Your Borrowings We are actually experts in accumulating debts of various types.
We borrow to build a house, purchase a car, pay medical bills and educational expenses of children, and pay utility bills every month.
We also make regular payments for amounts that we draw on credit cards or for purchased made through them.
You would definitely have one or more of these types of debts at any point of time.
Hence, it is necessary to analyze the type of debts that you have accumulated and the interest rates on each one of them to manage your finances properly.
Eliminate Debt with High Interest Rates The first question that you should ask yourself is about the rate of interest that you are paying on your debts after tax.
There are basically two categories of debts.
They are high interest rate borrowings and low rate borrowings.
The credit card payments originate from cash that you withdraw for emergencies or from the purchases that you have made on the credit card.
They actually carry very high interest rates.
In fact, you could even call them deadly debt traps that could easily suck you in and kill you.
Your first step should be to reduce the dues on credit cards gradually until you eliminate them completely.
Manage Debt with Lower Interest Rates Diligently The debts that you occur to build a house, purchase a vehicle, make payments for education of children, and pay for utility bills, insurance premiums, and medical bills usually carry lower interest rates.
Even your withdrawals from pension funds would have low rates.
Further, the repayment periods for most of these debts are long term and you could afford to pay them from your monthly income.
Still, it is advisable to save at least a few hundred dollars every month and try to clear your debt also as early as possible.
When you have reduced the debt burden considerably and brought it to manageable levels, you would have peace of mind and financial stability.
Since the interest that you would be earning from your investments out of the amounts saved by you, it is always advisable to clear off debt and increase your investment for a peaceful life in your later years.
You should also be saving simultaneously and keep investing the saved amounts regularly in instruments that are safe but offer higher yields.
The following tips should help you in reducing or eliminating your borrowings and starting the habit of saving.
Analyze Your Borrowings We are actually experts in accumulating debts of various types.
We borrow to build a house, purchase a car, pay medical bills and educational expenses of children, and pay utility bills every month.
We also make regular payments for amounts that we draw on credit cards or for purchased made through them.
You would definitely have one or more of these types of debts at any point of time.
Hence, it is necessary to analyze the type of debts that you have accumulated and the interest rates on each one of them to manage your finances properly.
Eliminate Debt with High Interest Rates The first question that you should ask yourself is about the rate of interest that you are paying on your debts after tax.
There are basically two categories of debts.
They are high interest rate borrowings and low rate borrowings.
The credit card payments originate from cash that you withdraw for emergencies or from the purchases that you have made on the credit card.
They actually carry very high interest rates.
In fact, you could even call them deadly debt traps that could easily suck you in and kill you.
Your first step should be to reduce the dues on credit cards gradually until you eliminate them completely.
Manage Debt with Lower Interest Rates Diligently The debts that you occur to build a house, purchase a vehicle, make payments for education of children, and pay for utility bills, insurance premiums, and medical bills usually carry lower interest rates.
Even your withdrawals from pension funds would have low rates.
Further, the repayment periods for most of these debts are long term and you could afford to pay them from your monthly income.
Still, it is advisable to save at least a few hundred dollars every month and try to clear your debt also as early as possible.
When you have reduced the debt burden considerably and brought it to manageable levels, you would have peace of mind and financial stability.
Since the interest that you would be earning from your investments out of the amounts saved by you, it is always advisable to clear off debt and increase your investment for a peaceful life in your later years.
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