Its been a while since we’ve gotten back to basics here so I thought I would go over something really fundemental to anyone starting down the financial journey.  In order to turn things around you have to save money and you have to pay down debt.  I know it sounds like an overwhelming task for the uninitiated but it’s not.  I promise you can do it.  If you have been ignoring the problem, guess what?  Its not going to get better on its own.  Take control.

Pay Down Debt and then avoid it

• If you use credit cards, pay off the balances every month. If you don’t, you’re paying interest—often 20 percent or more a year—on everything you purchased.  If you already have balances pay more than the minimum payment.  Pay as much as you possibly can.
• Limit the number of credit cards you have. Use your lowest-interest credit card, and then only for emergencies.

• Set a monthly limit on charging, and keep a written record so you don’t exceed that amount.

• Pay bills on time to avoid late charges.

• Avoid using blank checks you receive from financial services. These checks are cash advances that may carry a higher interest rate than typical charges.

• Pay cash.

Monthly Steps to Saving Money

Most Americans do not have much in savings, and lets face it, unforeseen circumstances happen. To help you prepare for them, you should have at least three to six months of living expenses stashed in your rainy day savings account. You can take steps today to build an emergency fund, save for a home, save for an education, or save for retirement.  Heres a little chart I found and added to:

Finding Money to Save Every Month

Save $.50 a day in loose change	$15
Cut soda/pop consumption by 1 liter a week	$6
Drink coffee from work, not starbucks	$40
Bring lunch to work (saving estimated $5/day)	$100
Eat out 2 fewer times a month	$60
Borrow, rather than buying, one book a month	$10
Buy generic brands	$37
Bike to work or the store one day a week	$20
TOTAL SAVINGS per MONTH	$288

Can you list at least five more things to do to save money?
Manage Loans to Save Money

Remember that loans are a liability that reduce your wealth, so choose yours carefully. By shopping for and negotiating the lowest interest rate, you can build wealth by investing what you saved on interest payments.

$15,000 Car Loan for 5 Years

	Interest Rate	Total Interest
Lender A	6.5%	$2,609.53
Lender B	7.5%	$3,034.15
Lender C	8.75%	$3,573.51

How much money would you save if you chose Lender A vs Lender C?

You can also save interest expense by increasing your monthly payments or choosing a shorter payment term on your loan.

$15,000 Car Loan at 10 Percent Interest

	3-Year	4-Year	5-Year
Number of Payments	36	48	60
Payment	$   484	$   380	$   318
Total Paid	$17,424	$18,261	$19,122
Interest Saved	$  1,698	$   861	—–

You can choose a shorter payment term with higher payments. By budgeting enough money each month to make the higher payments, you will reduce the amount of interest you ultimately pay, which means – even more savings!

By making wise choices, you can develop strategies and take immediate steps to control debt and build a nest egg for yourself and your family.

Nothing changes in one day

Remember it is the little steps that eventually make the biggest difference.  Rome was not built in a day, and your financial situation will not change in one day so don’t despair and don’t give up.  With time anything can be fixed so get to it!

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