Financial Updates

The ancient Babylonians were credited with mean the first people who came up with the idea of "paying yourself first." Although it is an old idea, it is still just as effective today as it was then. If you want to be able to grow your wealth, and live a more comfortable lifestyle, paying yourself first is critical. Here are a few tips and tricks that you can use to pay yourself first and boost your savings.

In some cases, you can have a portion of your paycheck put directly into some sort of savings account. Some payroll service providers make it possible for employees to send money from their paychecks to multiple accounts. You could have some of your paycheck go into your main checking account and another portion go into a savings account or an investment account. By doing this, you won't even notice the money coming out of your paycheck. Before long, you'll have a large sum built up in your savings account.

Another way that you can pay yourself first is to have automatic transfers set up with your bank account. For instance, you can set it up to have an automatic transfer done from your bank account to a savings account every time you get paid. When you make it automatic, you take it out of your hands. You don't have to make a conscious decision to transfer money to your account every month. By doing this, you can accumulate some major savings along the way. 

One of the big mistakes that many people make when it comes to saving money is that they try to wait until later in the month to transfer money to a savings account. They think that they'll pay all of the bills and expenses that they have, and then save anything that is left over. The problem with this scenario is that there is nothing left over. If you transfer the money right when you get paid, you have a much better chance of being able to actually save some money. Otherwise, you'll probably end up spending most of the money before it can hit your savings account.

Some banks are now offering special debit cards that transfer the change left over on each purchase to a savings account. For example, if you spend $4.20, $.80 will be transferred to your savings account. This makes it easy to get some money in a savings account. 

Overall, there are plenty of ways for you to start saving, if you will just do it. Make it a priority to begin saving money today.

The warning signs are all there. Your credit card bills are slowly increasing, while more and more you have to juggle your finances to pay everything on time. Even worse is if you miss a payment and face even greater challenges with penalty fees and increased interest rates. You know you need to take action to get your debt under control, but what’s the most effective way to pay back what you owe?

There are two methods to reduce credit card debt that have proven effective for consumers. Which method you choose is largely a matter of where you are with your finances and how you feel the most comfortable in paying them back.

With this strategy of debt reduction, you focus all of your efforts to paying off your high interest rate debts first. Since these debts build faster with accrued interest, it is often more efficient to pay them off first. In the long run you save money because you pay less for interest added to your debts.

You start by taking aggressive action to streamline your budget as much as possible. This allows you to free up money that can be put towards reducing your debt. Reduce discretionary expenses as much as you can for a while and look for ways to reduce flexible expenses, such as food or gas. You may need to commit to eating at home more and taking your lunch to work, couponing, and finding people to carpool with so you can share the high cost of gas. Keep in mind these cutbacks are only temporary, so these expenses can be reestablished once your debts are paid.

Once you have as much money as possible, focus that extra cash on paying off your highest interest rate debt first. Pay all of the minimum amounts required on the rest of your credit card bills, but put everything you freed up from your budget to paying off one debt at a time. After you pay off your highest interest rate debt, move on to your next highest, and so on until you are debt-free.

In some cases – either because your highest interest rate debt is too large or because you can’t free up enough money to pay it off quickly – you may wish to use the debt rollup method instead. This strategy largely works in the same way, except you focus on paying off the debt with the smallest balance first.

This allows you to see a positive impact from your efforts faster. It can also help you gain momentum to tackle your bigger debts. After you pay off the first credit card, you can “roll up” that money with the money freed up from your budget to pay off the next smallest debt. With each debt you pay, you have more money available to pay off the next debt until you are completely free of credit card debt.

If you assess your budget and even the rollup method won’t allow you to pay off your debts efficiently, it may be time to seek help. Contact a trained credit counselor to get an assessment of your situation. They can evaluate your debts, review your budget, and provide options to help you find relief from debt.