Showing posts with label Debt Management. Show all posts
Showing posts with label Debt Management. Show all posts

How working towards being Debt Free helps you with Saving More

This is the first time that SYF will be featuring a guest post. We're grateful that Mr. John Martinez shares with us effective ways on how to become debt free and to build more savings.

How working towards being debt free helps you with saving more by John Martinez
The more you will be expending money, the fewer will be your savings. Now, if you have more debts, it shows that you definitely have been expending more. This means, till now, you have been able to make only little savings. If you do not pay down your debts, it is not only the expenditure with regards to living, but also the debt payments, which is going to eat up your savings. So, it is true that being debt free can help you avoid hurting your credit, and also help you with saving more money in the long run.
Being debt free 
Though, making the debt payments in order to become debt free, is going to result in almost no savings in the initial months, it will prove to be helpful later. You will be able to save more and more, in the long run. So, what are the things that you will be required to do in order to become debt free? You will be required to:
source: Google
1. Incurring no more debts : While trying to become debt free, you will have to keep in mind, that it is important for you to avoid incurring any additional debt. This might not always be possible, but you will have to try this as much as possible. Only if you can put a control over the debt amount from increasing, may you be able to pay down the debts fast enough.
2. Cutting up plastic money : It is always better to cut up the plastic money, if you do not have proper control over your urges. Credit cards are mainly for emergency, but if you tend to use these for every purpose, it is better to hide those or cut up the same, so that you can avoid using those at the word go.
3. Following a well balanced budget : In order to become debt free, it is important for you to follow a well balanced budget. This is going to help you save some money on the expenditures. Ultimately, you may be able to pay down your debts easily enough.
4. Making on-time debt payments : It is important for you to make the on-time debt payments, as much as possible. It helps with maintaining the low debt levels, and thus also helps with becoming debt free.
5. Using a debt payment calculator : A debt payment calculator is going to help you with making the debt payments with ease. This is going to help you with planning the debt payments, and thus, you may be able to pay those off easily enough.
All of these tricks together, are going to help you with paying down your debts, and thus becoming debt free. 
Now, if you pay off the debts as fast as possible, and continue to expend low; later you will have the option to save more. With the savings in place, it is going to grow with time, as you will be adding more dollars to it. In order to maximize your savings, try investing in the mutual funds, stocks, and other investment options too.

Pesos and Sense Episode 7 (Video) about Managing your Credit cards and Debt

My apologies for uploading late the 7th episode of Pesos and Sense that talked about how you can manage your credit cards and loans properly. It is not bad to have loans since not all loan is bad. But you really have to think twice and classify what kind of debt do you have if you have an existing debt. Robert Kiyosaki explains the two kinds of debt in his bestselling book Rich Dad, Poor Dad: good debt is when you buy things that put money into your pocket like what they called 'business loans' and bad debt is when you buy things that take money away from your pocket like housing loan, car loan, SSS loans and credit cards. 

What kind of debt do you have?
In the first video, David Fabros shared his experience on how he trapped himself on credit cards and made the compound interest his powerful enemy. 

The second video will teach you how you can get out of debt. Discipline is key!

After you have learned the Technical Analysis by Mr. Juanis Barredo, the next video will teach you about the Fundamental Analysis discussed by Ms. April Tan, VP for Research of Citiseconline.

Lastly, question and answer by the host, Aya Laraya.

Credit card: Blessing or Curse?

A friend once asked me, “Which bank has the best credit card?” And as a former bank employee handling credit cards/personal loans, I told her, “All credit cards have the same purpose. It depends on how you will use it.” Everyone can apply and have one as long as you have a source of income. All you have to do is fill-up an application form, provide photocopy of your valid ID and latest pay slip/income tax return (ITR) as requirements.

Don't make borrowing a lifestyle
Friends, I am not encouraging you to get one but if you will use it only for emergency cases and pay everything that you purchased, you can do so. And have in mind that the following benefits are the reason why you applied for it:

1.       You don’t need to carry large sum of cash in your wallet;
2.       It is safer to bring than cash;
3.       You can make online purchasing easier and quicker;
4.       Widely accepted by a variety of merchants and businesses worldwide;
5.       For emergency purposes (unexpected visit to the hospital, buy medicines etc.) which I mentioned already;
6.       And you can enjoy bonus points to get free premium items or flights (Mabuhay Miles).

But due to extensive marketing campaigns and advertisements seen everywhere, companies are encouraging you to purchase things impulsively, things that you don’t really need. Swipe your credit card all you can! And not to teach you the proper way to handle those payables that will soon become your nightmare.

This is also the reason why you are living paycheck to paycheck. Buying clothes, gadgets and appliances that depreciate in value. If you choose to pay only the minimum amount at due date, compounded interest becomes your powerful enemy. You will notice that you are only paying for the interest only and not deducting any of your payment to your principal amount.

Unless you pay everything at due date, the total amount purchased for emergency reasons, you won’t be having problems with your credit card. And if you buy something that really gives you value. Something you purchased that grants another source of income.

        Only use your credit card up to the amount you are willing to pay for the next due date. Always remember your cut-off date, the day of every month that your statement of account generates. In that matter, you can easily monitor your purchases and have enough time to set aside your payment. Let’s say your cut-off date is every 5th of the month and due date is twenty-one (21) days after the cut-off. So all your purchases from the 6th day of the previous month up to the 4th day of the current month will be payable on the 26th day. Right? But if you will purchase after the cut-off date, purchases made will be billed next month. 

Spending your money should be a wise decision. Don’t make borrowing a lifestyle. 

Now, is your credit card a blessing or a curse?

You can simply leave a comment below if you feel there's something I can help you about your credit card.

photo: source