Getting The Most Benefit From Your New Savings Plan
So you're finally biting the bullet - you've decided to make a habit of saving.
Congratulations! Making the decision to take action is half the battle. Now you're ready to take on the other half - figuring out what to do with those extra dollars.
On Tuesday, we went over how to let go of your excuses and start saving. Today, let's talk about how to get the most bang for your buck. Usually, that means putting your savings someplace where it will earn the most interest. But if you're a newbie to the savings game, let's forget about interest for a minute and talk about debt.
If you're struggling with debt - and, if you've been putting off a savings plan for all these years, there's a good chance you are - you'll stretch your dollar the farthest by paying off your obligations before anything else. I know it might seem counterintuitive to put your extra cash towards stuff you're already paying for when there are so many investment choices out there, but think about it. What good will it do you to earn 10% returns in the stock market or 5% in a CD when you're shelling out 30% interest on your credit card balance? Better to pay down your debt, reducing the amount of time you'll be liable for that outrageous rate. Then, with the savings from eliminating future interest, you'll have more money for investing where you see fit.
Now let's say you finally manage to overcome your debt burden. What's next on the agenda? How about making sure you never become a prisoner to debt again.
It's possible with an emergency cash cushion - an account with enough savings to cover your family's basic living expenses for several months. Think of it as insurance, minus the crazy-high premiums. If you get laid off, wind up with huge hospital bills, need pricey car repairs, lose your house to a natural disaster or some other cause, etc, you'll be able to make it through the tough times without incurring a lifetime's worth of credit card debt. Believe me, it will be a lot easier to get back on your feet after an unexpected emergency when you're not smothered in bills you can't afford to pay.
Don't trust yourself to put away a portion of each paycheck for paying off debt or building a cash cushion? Then automatic payments are your friend. Simply have your bank set up an electronic payment that transfers a certain amount of each paycheck from your checking account to a designated recipient, like your credit card company, or a savings account.
Of course, if you're still making excuses, it could be that you're carrying too much debt. Bankruptcy is one of the most effective ways to take that burden off your shoulders. Find a plan that works for you when you sign up for a free personal debt analysis with one of our Atlanta bankruptcy attorneys. Or try one of our free community workshops. Make this the year you find financial freedom.