Get out of debt and enjoy life

You have finally made the decision that it is time to start saving money so you can get out of debt. You would like to start to enjoy the little luxuries of life without the problems of debt weighing you down. Well done on a good decision! You have been looking at different options on how to get rid of debt and ways to save money such as investing on the stock market in the event that you want to save in the long-term, or you have considered locking your money away for a substantial period of time in a bank account which offers a decent compound interest package.

Perhaps you would like to pay cash for a tropical holiday in the dead of winter and plan to put away a little cash away each month in a simple savings account at your local building society. No matter how you decide to save money you have made a good decision but you do need to research the best way for your special needs. There are many options for specific needs and you have researched them and finally come to a decision.

Can I afford to save now?

The next step is asking yourself if you can actually afford to save and if so how much can you save each month? The first thing you need to do is examine your budget. You need to examine your expenditure versus your income and calculate what extra funds you have to manoeuvre with. There are four areas that you need to consider:

  • 1.      Your debts. If you have debts, you are probably better off paying the debts first before saving as the interest on debts is usually higher than what you would get on any savings account.
  • 2.      Your budget: You need to understand if you can really afford to save. You will need to pay all essential bills before you are in a position to save.
  • 3.      Your pension: Putting your savings into your pension fund is an excellent way to save for the long-term future.
  • 4.      Death or Illness: Are you insured in case you become ill or if there is a death in the family? Insurance is a really good idea especially if you have a tight budget.
  • If your budget is tight and you have little room for saving, take a look at your list of expenses and see where you can cut back. Luxuries such aseating out, holidays, a second car, gifts and other items can easily be decreased until such time as you are clear of debt. For example, look out for specials at restaurants and sales at shops to save money. Try to save money at home by optimizing your use of energy and shop around for the best telephone, mortgage or insurance deals. You could end up savinga surprising amount of money each year. If you are in the habit of taking out short-term loans make sure you always pay the loans back to the payday lender on time to avoid high roll-over charges.

    As soon as you are in credit and find you have extra money to save each month, start shopping around for the best savings deals. You need to consider if you want to tie your money up for the short-term or the long-term. Look for the best interest rates as well as how much you need to deposit each month to get those rates. You might even consider switching banks for a better deal. Consider setting up a direct debit order, not only for your savings but also for suppliers such as gas or electricity, as they often offer if you use the direct debit way of paying. Always check your statements to ensure the proper amounts are being deducted in the case of direct debit orders.

    You have now successfully started to save and you have managed to get out of debt. Now you can start dreaming about what you are going to do with all the extra cash! Enjoy your well-earned freedom!

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