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How to prioritize the debt and save money



In the early years of your adult life, debt can increase rapidly. From repaying student loans to buying your first car, you can discover that the costs add more than you have on your checking or savings account. Therefore, some people turn to credit cards or personal loans in the 20th century to help with additional costs.

While you probably prefer not to carry debts, if you have to take out loans, it is important to prioritize paying off your bills and saving money. By following these tips, you can help you find ways to achieve both.

Credit Card and Loan Amount Payment

Credit cards or loans can help with the extra costs in the 20th, but the fees can settle quickly. And you probably know that if you do not pay the balance every month, you will probably be in the interest of interest which will start to cost you more over time. Below are some strategies that can help you start paying debt.

  1. "Snowball Method": US News and World Reports (US News) suggest using this method if you have balance on multiple credit cards. This method requires you to pay the minimum monthly payment on each credit card, while depositing the residual income against the minimum account balance ̵
    1; and repeating this process when the minimum amount has been paid.
  2. "The landslide method": US News recommends this method if you aim to save money on interest payments. You should focus on paying down the highest-interest account first and repeating this step when it has been paid.
  3. Pay accounts with a 7 percent or higher interest rate : Forbes suggests this strategy if you have some high interest loans and are trying to decide whether to use extra income to pay off debt or invest. Paying high interest loans can actually help you save more money in the long run by avoiding interest expense compared to what the money could have earned if invested instead, Forbes says.

Finally, if you get any vacation or performance bonus at work, US News says it might be a good idea to get extra income to pay off your debt.

Save to retirement

Just as important as prioritizing the debt saves for your pension. In fact, Entrepreneur Magazine does not start a pension fund early enough and does not put enough money into it. There are some mistakes that you should try to avoid during the 20th century. This is because the sooner you start a pension saving account, the longer it must earn interest. You may want to consider using a pension calculator first to see if you are on the right track with your personal pension goals. If you find that you are behind, but cannot afford to spend a larger portion of your income on retirement, consider increasing your contribution by 1% each year to increase your account slowly over time, Forbes says. You should also make sure that you fully utilize your employer's match on any applicable retirement accounts, if they offer one, because you do not have "free" contributions to your pension.

Starting an Emergency Fund [19659004] When unexpected expenses come up, an emergency fund will be useful – it can help you avoid spending any extra costs on a credit card. Before deciding how much to get rid of, take a look at your lifestyle and career, CNBC says. Do you have a constantly paying job, or are you a freelancer? If your source of income can vary regularly, it may be a good idea to save a little more money compared to someone who has a guaranteed income income each month. The balance recommends that you have an emergency fund equivalent to at least three months' expenses, but say that six-month expenses are more ideal if you have a family or a high-turnover job.

Your 20s are an exciting time as you make your way to adulthood. There are many new expenditures that can arise, so it's a good idea to create an economic plan that works for your lifestyle – keeping your debt and saving goals near the top of the list. If you set these goals early, you can get better control of your financial situation, not just today, but for retirement.

This information is provided for general consumer education and is not intended to provide legal, tax or investment advice.

Originally published August 26, 2015.


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