Tag Archives: Manage Money

Debt Stacking How to Manage Money

Do you have a plan in trying to eliminate your debt? Are you tired of making the minimum payments on each outstanding balance and never being able to make any progress?I want to go through what debt stack is and how to manage money and get rid your debt as fast and reasonably as possible. Something that is more interesting is you can follow the debt stacking formula to help create the retirement you’ve always hoped for!

What is Debt Stacking?

I have discussed this in one of my previous post but I think this is worth another look. Debt stacking is an easy principle of eliminating all debts in a triangle type formula. It is a proven theory and it can be easy plus you can get rid of your debt two or three times more quickly then you may have thought possible.

HERE’S WHAT TO DO:

STEP 1: Create a list of all of your current debt. Put each amount in order from the lowest amount to the largest.

STEP 2: Set up an emergency fund in a savings account. The lowest amount you should have is $1,000. You just never know if or when you may need it.

STEP 3: Always make the minimum payments every single month that is required on all of your debt until the first one is paid off.

NOTE: If you usually pay extra on one or more of your balances each month, apply that extra amount to first item (of the lowest balance) on your list. (for example if you pay $200 extra each month on item number 3 switch that amount, regardless of interest to the lowest balance)

STEP 4: Once the lowest debt has been paid, use that money against the next lowest balance (the second one) on your list. This will help speed up the amount of time it will take to pay off the second balance.

STEP 5: Repeat that same process to the next debt or until all have been eliminated. Remember you are not spending any more money and it will accelerate the process.
REMEMBER: For this to work effectively you must not create any new debt.

Let’s look at a typical example:
TYPE: AMOUNT: REQUIRED MONTHLY INTEREST RATE:
PAYMENT:

Credit Card $7,500 $150 16%

Car Loan $10,800 $350 8.5%

Student Loan $14,600 $365 7.25%

Mortgage $139,000 $940 7%

TOTALS $171,900 $1,805 —–

If you only made the minimum required payments:

It would take 32 years to be completely out of debt.

In those 32 years you would have paid $205,485 in INTEREST for a total of $377,385.

If you apply the Debt Stacking Formula:

It would take just 12 years to pay off that same debt.

In those 12 years you would have paid just $86,343 in interest for a total of $205,485.

It may seem too good to be true but this is an easy process that works. You are not making any changes to your monthly payments, just a different approach. Every situation is different but debt stacking can work for anyone.
How Debt Stacking would help with retirement:

Once all of your debt has been eliminated, take the same total minimum required monthly payment of $1,805 and invest it. Do that each month for the next 20 years. You would have been paying that amount for another 20 years anyway. If its invested at 8% you will have $1,179,533 in 20 years. Nothing in your lifestyle has changed.

Basically debt stacking will dramatically reduce the amount of time it will take to pay off your debt and it will also reduce the total amount of interest you will pay AND it will help create the nest egg you have always wanted. That sounds pretty great doesn’t it?

When it comes to paying off debt you don’t always see results. It’s hard to stay focused and maintain hope when those large balances don’t seem to disappear until the last few years. The key is to pay as little interest as possible so you will have more of your money in your bank account down the road. I hope this post helped you understand debt stack and taught you a little more about how to manage money.

Until next time,

How to Manage Money

If you are similar to everyone else you probably feel as though you could make more money and don’t know what to do with the money you have. The mega wealthy know how to manage money and are able to manage the lifestyle we all dream of. Here are a few helpful ways that you can turn your finances around and help you to be far more wealthy than you imagined.

Better Time Management at Work

There are ways to be smarter with how you spend your time at your job. Many of us relish the ‘water cooler meetings’ but is it the best use of your time? Probably not. Instead of talking about the most recent episode of 24, learn to be an expert on a certain part of your job, figure out something new, or find a way that will cut costs. The more you put into your job the more you will get from it. Make yourself stand out as the perfect person for any promotion or salary increase. If you’re truly motivated enough you might even discover yourself in your bosses chair.

Negotiate Your Salary

When most people begin a new job they are usually too scared to negotiate their salary and take whatever is offered. Statistics show that those that negotiated how much they want to make increased their salary by almost eight percent versus the people who did not. What’s the worst case scenario? You might just get the big fat pay raise that you want and create new ways of how to manage money.

Be More Charitable

It’s amazing how well the ‘pay it forward’ mentality works for the rich. The average household with an income of over $500,000 gave away over 6% of what they make to charities or special causes. Not only does giving back to those who need it will supply you with a lot of satisfaction and you can write off donations come tax time. If you are really on top of your finances you may even be able to put yourself into a lower tax bracket.

Own Your Own Business

As the old saying goes ‘You can never get rich by working for someone else.’ It takes a lot of work, determination, headaches and sleepless nights to own your own business. On the other hand, the sense of accomplishment, excitement and financial rewards of having your own business are immense. Before you quit your job and start a franchise that sells chocolate covered bananas, do a lot of research and make a business that can sustain you and your family. The more {preplanning you do|you plan and discover how to manage money properly, the more successful you will be. The rich don’t become wealthy by chance.

Strategize Borrowed Money

The wealthy often borrow as much money or more than the average person but they way they borrow money is very different. The wealthiest people in the world are half as likely to have credit card debt and they are also less likely to have auto loans. Most of the wealthy carry mortgages much like the average person and they are three times more likely to have loans on real estate investments. The rich know how to manage money better than most people because they wisely borrow.

Buy Into Real Estate

Do you think Bill Gates or Donald Trump rent their homes? If you want to get ahead with your finances and stay ahead you must buy real estate. Don’t purchase outside of your budget. Try to buy something that you can afford and can even fix up and sell in a couple of years for a major profit. By renting, your money is being wasted. Chances are your mortgage payment will be as much or less than you are currently paying in rent.

It may take baby steps but if you want to get ahead with your money and follow these tips of how to manage money. The wealthy aren’t rich by fluke. They usually take calculated risks and are rewarded financially in the end. You have it in you to make the same kind of decisions and start making the money you’ve always dreamed.

Saving Money

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Money Saving Tips – How to Manage Money

What should you do with your hard earned cash? There are many choices we face on a daily basis that can create confusion and can point us in in a different direction at any time. There are many things that we should and shouldn’t do with regards to our finances and how to manage money. Let’s go through some of the more important ways to start saving and put your money where it belongs.

  1. Understanding when you should stop

The issue most people face when knowing how to manage money is knowing when you should stop. This may be a somewhat vague statement but I’ll help clear that up. Understanding when you should stop can pertain to all kinds of different parts of your finances. You should know when to prevent buying things on each day, week or month and that all comes down to budgeting. You must understand when to stop investing in each part of your financial portfolio and start in another. You must understand when it is time to stop using the credit card and begin to buy with real money. These ‘stops’ are of vital importance to our financial success and there are many more. Every situation is unique and you need to go through some of the trouble areas in your financial life to discover where you need to stop. It could be you are paying too much for for your telephone and web service. You need to know when enough is enough and put an end to cash wasting services or purchases. The amount of money you will save if you know when to the draw the line will amaze you.

  1. Eliminate Impulse Buys

All stores rely on impulse purchases more than any other item sold. They will draw you in with a great deal on several things in their flyer. You end up getting those items up but while you shop you purchase several other things that were not on the list. All of us can be sucked into the impulse buys when we go to the mall, convenience stores or the grocery store. Often times we don’t know we’ve made an impulse buy. If you chew gum, have an issue of ‘Cosmo’ magazine on the coffee table or have fuzzy dice dangling from your car mirror it’s likely you have made an impulse buy. We make impulse buys on an almost daily basis. Those purchases empty our wallet and savings account of a lot of cash. Here’s an example of how much you can spend: If you pack of breath mints {per|each|every| week you are spending about $78 every year. Throw in one magazine each week, a Starbucks coffee every day, a chocolate bar every two weeks etc. It’s not hard to do the math you’ll figure out that we spend thousands of bucks each year on these items that we didn’t plan on buying. If you avoid them you’ll easily save thousands of dollars for your retirement plus you will know the basics of how to manage money.

  1. Plan Ahead

Planning is key when dealing with your finances. If we go around without putting any thought into where our money is going there is a high likelihood that it will all be gone after a couple of weeks. They key tofor solid financial planning is planning ahead.

My Step by Step Advice:

1st: Know how much every guaranteed monthly expenses are and place aside that sum from your paycheck. Those items include electricity, cable, car payment etc.

2nd: Set aside $25 (or more) every week that will go into your emergency fund.

3rd: Make a meal plan and then do your weekly grocery shopping. If you have all the food you need in the house it will prevent you from going to the corner store to buy a loaf of bread for $4.

4th: Budget no more than 10% of your paycheck for weekly spending. If you spend that 10% by Monday then you don’t get any more. Don’t dip into next weeks budget and don’t let last weeks budget roll over into the current week.

5th: Make a financial goal at least once a week. If you want to go south this March, create a goal to make that dream come true. If you want to own a house next year, start making that goal happen. If you want to save an extra $20 a week, figure out a way to make it happen. This will show you how to manage money and get you on the right track to your financial freedom.

Should you go out and spend your money with reckless abandon or save wisely? I’m pretty sure you know the answer to that question. Managing money isn’t as hard as you think and can be easy to save for the retirement, house or vacation you’ve always dreamed about. You simply need to understand when enough is enough when it comes to spending. You also need to stop impulse purchases. The last thing is good financial planning. If you make an honest effort at making those 3 things happen, you will be close to knowing how to manage money better.

How to Manage Money and Make it Grow

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The 12 Debts of Christmas Part One

Oh the weather outside is frightful

But the fire is so delightful

My credit card is maxed out so

Let it Grow! Let it Grow! Let it Grow!

Tis the Season for too much spending

And there’s just no comprehending

How will I pay my bills next year?

Let em Grow! Let em Grow! Let em Grow!

My debt is as deep as the snow

Oh what a terrible fright

And I know it will continue to grow

How will I sleep through the night?

Now the presents have all been given

To the poor house I have been driven

And my credit scores are way down low

Help it Grow! Help it Grow! Help it Grow!

Christmas is right around the bend and you have a couple things on your mind. How am I going to avoid dinner at the in-laws and how am I going to pay off my credit card this January? Over the next couple of weeks I will go through 12 ideas for holiday debt relief. Each one will teach you bit by bit how to manage money and create a debt free 2010!

HOLIDAY DEBT TIP 1: Don’t Add More Debt

Did you know that every $50 you tack on to your credit card balance will add another month to the time you can to pay it off. Don’t worry, the holiday’s aren’t canceled! You don’t have to tell the kids that Santa isn’t coming this year. You have to keep tabs on your budget. Right now you should really sit down and calculate the numbers. Decide the things you must have and what you can afford to lose. Do you really need a stocking stuffer for your pet iguana or a brand new outfit to show off for Christmas day? Figure out what is truly important and what can be missed. You may amaze yourself with how much you can actually save. Christmas is a wonderful time to learn how to manage money.

HOLIDAY DEBT TIP 2: Make a List and Check it Twice

It might be easy to overlook your finances during this busy holiday time but you must remember the big picture. It’s time to set goals and follow through with them.

Goal #1: Start an Emergency Fund – Any amount helps. Even if you can you spare $10 or $25 each week it’s time to start now and it will help. The goal is to have at least $1000 saved up and the sooner the better.

Goal #2: Start Debt Stacking – those credit card bills are starting to arrive in the mail right about now. This is a great time to start snowballing your debt. Review my previous posts for debt stacking tips.

Goal #3: Cut the Cost of Living – There are all sorts of ways to reduce those expenses. Turn down the heat a couple notches when you are at work or when you are about to go to bed. Turn off all lights when you aren’t in a room. Check any windows or door ways where hot air may be seeping out and seal it up. The amount of money you will save will amaze you.

Goal #4: Clip Coupons – All retailers want your hard earned cash. Look on the Internet or in the newspaper for bargains. If you shop around for the best deals you will save lots on your Christmas purchases.

You should create 6 more personalized goals for yourself. If you are having trouble find some resources on this blog that will help. If you have some questions ask me and I will try to help!

For my next post I have created another delightful song you can sing around the Christmas tree with family and friends and I have created some more tips on how to manage money and remain debt free this holiday season/Christmas!