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Assessing Bad Debt + Monthly Budgets [4]

Continued from [3]

Now we need to discuss savings accounts a little bit. You will also find this to be ridiculous (maybe) because I am going to tell you to save 10% of your household income every month into a simple savings account. You may be saying to yourself,

“…how can I afford to put 10% of my earnings into savings when I should be spending that money on paying down bad debt and paying off unfortunate contracts I have got myself into….”

That is a valid question and there are many who disagree with me on this matter. I am here to tell you that this does work and over the years you will find that you are happy you took this action.

For instance a personal example;  our family household income is $15,000 take-home a month, and we put $1500 into savings every month regardless of the balance on any lines of credit or credit cards. I know that some would say this is wrong because you need to pay off your bad debt as soon as possible to avoid the interest charges, but I have found that people generally never put money into their savings because they’re always paying down bad debt.

I stand by my philosophy of paying yourself first. So please do this at the same time you are getting rid of some of your unneeded monthly payments, bad loans, and monthly costs on recreational items you don’t really need. Let’s face it – you have spent years getting yourself into a financial hole, and it may take a couple of years to get yourself out. Why not start saving now, and start dealing with your monthly bills and debts at the same time.

You may find if you follow my ideas here today that in two or three years time you will have saved quite a lot of money and your debts will have dwindled down two almost nothing (I am talking about your bad debts here).

Furthermore, we found that when we did this personal finance worksheet we began to think of other ideas on how we can bring money into the household without any more work and without any more investment.

What we did is make a plan to do things like rent out stuff we don’t always use. For instance, we have a 24 ft. motor home now which we only use a small portion of the year. We rent out the motor home and it pays for all of the monthly expenses and the loan payments on the RV.

As well, we put our house on VRBO (Vacation Rentals By Owner – a web site where you can rent out your house) so that when we go on vacation our house is being rented at the same time paying for our vacation costs.

End of Assessing Bad Debt + Monthly Budgets Part [4];

Read on Assessing Bad Debt + Monthly Budgets Part [5];