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Hello and welcome to DrFrugal.com. If you've ever had the unfortunate experience of trying to find information online that has anything to do with money, you know most sites are worthless because they're trying to pawn something. Not here--there's nothing to buy. I've tried my best to only include pragmatic, realistic informtion to help you lead a simpler life by taking care of your personal finances.
Have you ever thought about debt and wondered just how much you owe·
Do you have any idea what your debt even looks like, beyond paying that minimum monthly payment every month and not so much concerning yourself with the grand total·
If you answered yes to any of these questions, chances are you're doing adequately with your debt in that you're paying what you need to but not addressing the proverbial elephant in the room.
Your massive amount of debt.
If you don't know how much debt you have, there's a good chance you're swimming in it. Those who are financially responsible with their debt can tell you exactly what they owe down to the last cent, even if that number is so staggering that it is embarrassing.
There are other tell tale signs that you're in a ton of debt, some more subtle than others, while you get those moments when your debt is so bad and the red flags are overt and bright as can be, that you simply can't look away for a second.
For starters, if you're getting phone calls from your bill collectors that you owe money, you're probably carrying quite a bit of debt. You also want to check your debt to income ratio to see if it's in the ballpark of the 70 and 30 range (the latter number being the percentage of debt you have in relationship to your income). In addition, you're carrying too much debt if your balances owed are put up against the total amount on the card. A $4,900 balance on a $5,000 credit card is bad news, especially if more than one card is like that.
Debt also becomes an issue when worrying about it starts to change how you act in life beyond the checkbook and savings account. If you are having trouble focusing or you worry about debt so much to the point that you can't work or you're productivity is taking a turn for the worse, you can't ignore those signs, either. We often don't think about the stress of debt and if it keeps us up at night and thus changes or attitude, mostly for the worst.
Finally, if you find yourself using credit card or taking out more loans to pay other debts or loans, you're not really getting to the root cause of your issues, and that is ultimately eliminating your debt or simply budgeting better in that regard.
If you aren't really at liberty to take your debt head on, or you're so concerned with it that you ignore it, that's a sign you have too much debt and a major money overhaul needs to happen.
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The perception among most is that saving money is hard, when in actuality the complete opposite can be true.
Sure, you'll have months when the roof blows off or your car quits on you, and finances tend to tighten a bit at that point, but if you've saved and paid attention to budgeting your money, those aforementioned expenses can be covered with little fret on your part.
For the most part, saving money is a balancing act that some navigate like a tight rope over the Grand Canyon. They know exactly how to save and what they're spending, and won't deviate from the plan. When something unexpected arises, they're prepared with their savings account waiting in the wings.
Viewing money as a struggle just means your perception is off, and that you're not in tune with your spending habits or being able to find subtle, less obvious ways to save.
Energy costs are a prime example of how some people know that only a few degrees up or down on their thermostat can save you hundreds each year or that buying an energy efficient appliance might cost more up front but can save you thousands based on the amount of electricity they pull.
That same group that is thermostat conscious also will tell you that they have been able to save by cutting back on take out or eating out at restaurants. If you're spending $200 to $300 per week on your grocery bills and another $200 on restaurant dining, something has to give. That grocery bill should be a gateway to packing lunches or eating and cooking dinner at home, not having the food sit and potentially be wasted while you're hitting the drive thru or forgoing pots and pans and clean up for a faster, more convenience yet expensive means to have dinner.
And on that same vein, don't make grocery shopping a stock up trip, particularly on food that you're not going to get to for years or could spoil. Having hundreds of dollars sitting in your pantry or cupboards is dead money, like a business that has too much money sewn up in inventory.
Instead, run a tight ship in the kitchen and at home. Buy what you need and plan your meals accordingly so you're not over buying and looking at cans, packages and other items on shelves that is money sitting and could be more pertinent for something else (like a savings account).
While saving money isn't a given, it doesn't have to be so laborious that you simply throw your hands up and let the status quo become your customary way of living when it comes to money.
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The question that most of the world faces as they continue toward retirement is plain and quite simple: are you going to have enough to retire·
The real issue stems from whether or not you're doing two things well at the moment: saving money and putting enough away toward retirement·
The savings part would seem pretty obvious if you've spent your working years putting aside money by having a budget and keeping track of income and expenses and making sure the entire financial pot get stirred as you take the extra money and not only have it set aside in a savings account but also allot enough toward a retirement account, whether that's in the form of a company 401K or an IRA you started on your own.
But as much as we know we need money saved for retirement, how exactly do we make sure it all goes down as planned· Are there any trick toward saving and having enough money when you retire·
The average retirement account fluctuates between $120,000 and $160,000, which hardly seems as though that can last you from the age of retirement and beyond. Two numbers that you can't ignore and should heed centers on your age and the amount of money you should be saving in totality as it relates to your income.
Those who believe and hold close to them that retirement and starting to save for it has no number as far as age go would be correct. The best route you can take is starting to save the moment the opportunity becomes available, even if that is in your 20s. The mentality should be the sooner the better, particularly if you get a job where the company matches you dollar for dollar retirement wise. In your 20s or even 30s, retirement needs to be a high priority.
Furthermore, you shouldn't be stingy with it and how much you set aside. Generally speaking, you should be saving about seven to 10 percent of your total income toward retirement when you're in your 20s.
Now, one of the things that you want to steer clear of as far as retirement and savings go is borrowing from your 401K, an all too common practice. Borrowing should be a last resort, particularly if it is ill advised and for something that isn't a home repair or a major event that you desperately need cash for without a question.
Retiring is the dream of everyone, being able to say they worked hard and was able to enjoy their post work happenings. But that thinking needs to be apparent well before you call it quits thus taking the pressure off of yourself a few years before you actually go.
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Credit cards, just those words, are, well, bad.
No one wants to associate with credit cards or have anyone know they have one, much less a trail of them, which means you're paying and not making headway on those higher interest rates and seem as though you'll never get out of debt.
But can credit cards actually be a good thing·
Naturally, you can spin credit cards into something that aren't so bad, namely the ones that are fighting for your business, will offer you bonuses and perks, as well as lower interest rates and those other elements you look for in a credit card.
The bare bones of credit cards indicate you should only use them in an emergency or if you're buying something online (and security might be an issue), but the bottom line is you should use the credit card and try to pay it off as soon as possible.
Being able to pay off that card as soon as possible means you should find a creditor or lender that can work with you as far as when you pay your bill. Keeping your credit and score in line means paying on time, so make sure that payment date works for you. The payment date, despite what some card companies will tell you, can be worked out and chosen or moved to help you, for instance, pay off your balances in full when that pay date comes around your pay day.
As much as everyone who has a piece of plastic knows this, that rule isn't followed. Credit cards should never be used for things that aren't tangible, like using them to pay bills or charging your way to a vacation for two.
Finding the right credit card really makes a huge difference, so as you begin to think about credit cards or finding one, think about choosing one that, for instance, offers you a bonus for signing up, such as frequent flyer miles you can use or some sort of points system that is paid out immediately upon getting the card.
You'll want to steer clear of annual fees, which are truthfully a thing of the past. Credit cards are begging for business, and most will let you have a card without charging you just for that sole purpose (of having one).
Having a credit card today is a necessity for the majority of people, but that doesn't mean you have to succumb to the bad habits or even the bad cards, especially when you're adept at shopping around for the cream of the crop of credit cards.
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Patience is always a virtue but that sentiment couldn't be more apparent and relevant then when you're talking about money, more specifically credit card or any sort of debt that is mounting and you feel as though you'll never get ahead or even close to being out of debt any time soon.
How do you know if you debt has taken hold of you to the point that you're in need of a major overhaul·
If your debt is being handled on a very minimum basis, you aren't going to do anything but pay an extraordinary amount of interest and never get out of debt. And by "never," you're talking decades of paying.
The minimum payment works if you're just trying to pay on time, but paying on time might help your credit score to some degree, but if you're maxing out lines of credit and are nearly at your ceiling on credit cards, you're going to be viewed as a credit liability.
You can't just pay the minimum payment if you expect to get out of debt.
The best advice is to start with the smaller amounts of debt you have and pay them off so you can continue to pay down total debt and set mile markers of sorts of yourself so you can see progress.
Naturally as you move on to lines of credit with higher balances, you have to begin picking based on not only amounts owed but also the amount of interest that you're paying. Higher interest cards should be the first of your priorities if the balances are roughly the same between two or three cards or lines of credit. The higher rate as your main focus means if you have $500 to pay on credit cards, make sure the majority of your credit budget goes toward that higher card in the attempt to pay it down and stop paying extra in the form of the high interest.
Often what tends to be overlooked as far as paying off debt is your income. You can cut expenses out of your budget, such as cable, cell phone extras, clothing and restaurant dining and that extra income that you created from saving can be used to pay off more of your debt, so while that money won't be put aside you can climb out of debt faster.
If you're in debt and it is sizable, you have to remember that this is going to take time, but that doesn't mean you have to pay only the minimum but rather make a few adjustments to maximize just how quickly your debt goes away.
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