Hoping to pare your debt? Greg McBride, senior financial analyst with Bankrate.com, helped msnbc.com come up with a list of tips for alleviating debt troubles.
1. Keep a record of your expenses
The first step in getting out of debt trouble is to understand how you got into it in the first place. Keep a record of how much money is coming in and how much is going out, to figure out where you are going wrong.
2. Set a strict budget
Once you know where you’re going wrong, take steps to fix it. Figure out how to live within your means and force yourself to stick with the plan.
3. Cut expenses
To keep in line with your budget, look for places where you can cut expenses, such as meals out, a pricey cable bill or other little things that might add up.
4. Boost your income
If you can’t find a way to make ends meet, look for ways to add to your income pool, whether that means taking on extra hours at your current job, finding a second job, or selling some possessions.
5. Focus on paying down debt.
Once you’ve got your expenses under control, work on paying off those credit card bills and other sources of debt.
6. Establish a savings cushion.
“You can’t wait until your debt is paid off to then establish the savings cushion,” McBride says.
Instead, he recommends immediately changing your direct deposit preferences so that some amount of your paycheck goes into a savings account every month.
For one thing, a savings cushion will help you get into the habit of saving. For another, it will allow you to cover an unexpected or emergency expense without running up the credit card bill again -- and erasing months of hard work.
7. Put money in a retirement account.
Although retirement may seem far away, it’s important to start saving early. Ideally, you should be putting at least 10 percent of your income into the account. Establishing a habit of socking away money for retirement also will help you learn to be a saver, rather than a spender.
“If you’re not training yourself to live on less than you make, you’re never going to build wealth,” McBride says.
8. Take a hard look at your mortgage.
The first step in managing mortgage debt is to make sure that you can reasonably make your payments. In most cases, that means your mortgage is equal to 30 percent or less of your income. Next, make sure that your payments are going toward paying off both the interest on the loan and the principal amount owed, so you are gaining equity in the process.
“The interest-only payment on the mortgage is like a treadmill to nowhere,” notes McBride.
9. Look at your other spending habits
Are you routinely buying new cars before you’ve paid off enough of your old car loan to make financial sense? If your student loan tab manageable given your career choice? Once you’ve tackled the big sources of debt trouble, dig deeper to see what else you can do to stay on the right track
10. Don’t worry if you aren’t there -- yet
Remember, the ultimate goals -- eliminating credit card debt, establishing a big savings cushion, saving a chunk of money for retirement -- may not be achievable overnight. The important thing is to set yourself up so you can eventually reach your financial targets.
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DEBTquiz_business.profiles[i++]= new Array(1,3,"WORKING OFF YOUR DEBT: OK, few of us are perfect, but it sounds like you are working hard to minimize your debt. Check out the tips below to see what else you can be doing to keep yourself from getting too bogged down by debt.
Hoping to pare your debt? Greg McBride, senior financial analyst with Bankrate.com, helped msnbc.com come up with a list of tips for alleviating debt troubles.
1. Keep a record of your expenses
The first step in getting out of debt trouble is to understand how you got into it in the first place. Keep a record of how much money is coming in and how much is going out, to figure out where you are going wrong.
2. Set a strict budget
Once you know where you’re going wrong, take steps to fix it. Figure out how to live within your means and force yourself to stick with the plan.
3. Cut expenses
To keep in line with your budget, look for places where you can cut expenses, such as meals out, a pricey cable bill or other little things that might add up.
4. Boost your income
If you can’t find a way to make ends meet, look for ways to add to your income pool, whether that means taking on extra hours at your current job, finding a second job, or selling some possessions.
5. Focus on paying down debt.
Once you’ve got your expenses under control, work on paying off those credit card bills and other sources of debt.
6. Establish a savings cushion.
“You can’t wait until your debt is paid off to then establish the savings cushion,” McBride says.
Instead, he recommends immediately changing your direct deposit preferences so that some amount of your paycheck goes into a savings account every month.
For one thing, a savings cushion will help you get into the habit of saving. For another, it will allow you to cover an unexpected or emergency expense without running up the credit card bill again -- and erasing months of hard work.
7. Put money in a retirement account.
Although retirement may seem far away, it’s important to start saving early. Ideally, you should be putting at least 10 percent of your income into the account. Establishing a habit of socking away money for retirement also will help you learn to be a saver, rather than a spender.
“If you’re not training yourself to live on less than you make, you’re never going to build wealth,” McBride says.
8. Take a hard look at your mortgage.
The first step in managing mortgage debt is to make sure that you can reasonably make your payments. In most cases, that means your mortgage is equal to 30 percent or less of your income. Next, make sure that your payments are going toward paying off both the interest on the loan and the principal amount owed, so you are gaining equity in the process.
“The interest-only payment on the mortgage is like a treadmill to nowhere,” notes McBride.
9. Look at your other spending habits
Are you routinely buying new cars before you’ve paid off enough of your old car loan to make financial sense? If your student loan tab manageable given your career choice? Once you’ve tackled the big sources of debt trouble, dig deeper to see what else you can do to stay on the right track
10. Don’t worry if you aren’t there -- yet
Remember, the ultimate goals -- eliminating credit card debt, establishing a big savings cushion, saving a chunk of money for retirement -- may not be achievable overnight. The important thing is to set yourself up so you can eventually reach your financial targets.
");
DEBTquiz_business.profiles[i++]= new Array(4,12,"IN DEEP DEBT TROUBLE: What you need is a plan -- and maybe a bit of professional help. Click here for 10 tips to help yourself get out from under unmanageable debt.
Hoping to pare your debt? Greg McBride, senior financial analyst with Bankrate.com, helped msnbc.com come up with a list of tips for alleviating debt troubles.
1. Keep a record of your expenses
The first step in getting out of debt trouble is to understand how you got into it in the first place. Keep a record of how much money is coming in and how much is going out, to figure out where you are going wrong.
2. Set a strict budget
Once you know where you’re going wrong, take steps to fix it. Figure out how to live within your means and force yourself to stick with the plan.
3. Cut expenses
To keep in line with your budget, look for places where you can cut expenses, such as meals out, a pricey cable bill or other little things that might add up.
4. Boost your income
If you can’t find a way to make ends meet, look for ways to add to your income pool, whether that means taking on extra hours at your current job, finding a second job, or selling some possessions.
5. Focus on paying down debt.
Once you’ve got your expenses under control, work on paying off those credit card bills and other sources of debt.
6. Establish a savings cushion.
“You can’t wait until your debt is paid off to then establish the savings cushion,” McBride says.
Instead, he recommends immediately changing your direct deposit preferences so that some amount of your paycheck goes into a savings account every month.
For one thing, a savings cushion will help you get into the habit of saving. For another, it will allow you to cover an unexpected or emergency expense without running up the credit card bill again -- and erasing months of hard work.
7. Put money in a retirement account.
Although retirement may seem far away, it’s important to start saving early. Ideally, you should be putting at least 10 percent of your income into the account. Establishing a habit of socking away money for retirement also will help you learn to be a saver, rather than a spender.
“If you’re not training yourself to live on less than you make, you’re never going to build wealth,” McBride says.
8. Take a hard look at your mortgage.
The first step in managing mortgage debt is to make sure that you can reasonably make your payments. In most cases, that means your mortgage is equal to 30 percent or less of your income. Next, make sure that your payments are going toward paying off both the interest on the loan and the principal amount owed, so you are gaining equity in the process.
“The interest-only payment on the mortgage is like a treadmill to nowhere,” notes McBride.
9. Look at your other spending habits
Are you routinely buying new cars before you’ve paid off enough of your old car loan to make financial sense? If your student loan tab manageable given your career choice? Once you’ve tackled the big sources of debt trouble, dig deeper to see what else you can do to stay on the right track
10. Don’t worry if you aren’t there -- yet
Remember, the ultimate goals -- eliminating credit card debt, establishing a big savings cushion, saving a chunk of money for retirement -- may not be achievable overnight. The important thing is to set yourself up so you can eventually reach your financial targets.
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