How Can I Pay off Debts & Save At the Same Time?
Nowadays, there are many people who have found themselves in debt and are looking to pay off their debts quickly while saving money at the same time.
Debt can be a major drag to your financial future, and having it around may make it feel almost impossible to save money towards other goals or for the future.
So the question that comes to mind is; how can I pay off my debt and save at the same time?
Well, fortunately, there are a few things you can do to tackle this.
In this article, we are going to look at some ways to pay off debt and save money at the same time.
1. Create a Budget
Creating a budget is essential to figuring out exactly where you are spending your money and where you have some room to make cuts. When creating your budget, you need to carefully examine your priorities. For instance, if you are paying 60 pounds a month for a cable package, determine whether you really need it, or if you can live without it by switching to streaming services. This can help you save 40 to 50 pounds each month which can add up over time and you will see significant savings.
2. Consider Your Debt’s Interest Rates
One of the most important factors to consider when trying to pay off debts and save money at the same time, is the interest rates on the debts you have. There are a couple of different methods you can use to pay off debts. The first method is known as “the higher interest rate method”, which involves tackling debts which have the highest interest rates first like credit cards. The second method is known as the “snowball method”, and it involves paying off the smallest debts first. Once you pay off the smallest debt, you move to the next smallest debt. This method helps you see progress much faster, especially if you have got numerous small debts.
3. Consolidate Your Debts
Debt consolidation involves rolling your debt payments like credit card bills, into a single lower interest payment. i.e depending on your credit score. This method basically reduces your total debt by reorganizing it so that you are able to pay it off much faster. That said, it’s important to note that the main method of consolidating debt involves getting a fixed rate debt consolidation loan, which you can use to pay off your debts, and then you pay back the loan in smaller installments over a specified period of time.
4. Build an Emergency Fund
You can use your monthly income to pay the expenses first, and then dedicate what’s left to building an emergency fund. You can start by depositing a small portion of each monthly payment into a cushion savings account. This money can come in handy when you are faced with an emergency situation like a sudden illness or you get fired. Consider establishing an emergency fund that can cover at least 3 to 6 months worth of your living expenses. Although it might seem nearly impossible to pay off your debt and save money at the same time, it can actually be done. All it takes is discipline, dedication, strategic choices and creative budgeting, and you will be well on your way to living a debt-free life while saving for retirement.
These are just some of our thoughts on tackling mounting debt. Let us know if you have any tips and tricks of your own