Debt Management - Create Your Own Liquid Cash And Minimize Your Debt
Remember when you were young and you used to put all your spare change in your piggy bank? You would lift the couch cushions up to find spare change that fell out of someone's pocket just to add a little more to your piggy bank. Those were the days when parents were teaching kids a lesson that was important. We were taught how to save our money in order to buy something we wanted.
Nowadays, very few children have a piggy bank to put money in. For those of us that did once have a piggy bank, we now often use a container that allows for easy quick access. Very different from the banks we had as children, that needed to be broken in order for us to get the money out.
This life lesson has been forgotten by many adults that once had a piggy bank. Too many people no longer save money for a rainy day. Instead we buy expensive items and put it on the credit cards. Actually, by spending only cash for an item you are saving yourself a larger sum of money on the interest rates.
There was a time when children and adults would have to save money to buy the things they wanted. To buy a house you would have to have at lest half of the cost in order to qualify for a loan. Years later, around the 1950's you were able to put a smaller amount of money down to buy a home, as long as you had credit worthiness. Usually this amount was closer to around 20% of the purchase price. Then in the late 1990s and early 2000, banks were giving out loans without a deposit. At the time of writing this article, the banks in the western world are looking very weak.
Nowadays, our satisfaction through physical things has to be immediate. No longer are people willing to save for something, instead if they do not have enough cash on hand they will put it on the credit cards. This leaves very little reason to save money. For sure credit cards have their place when it comes to purchasing goods and in the UK not least because they are used to establish how credit worthy you are i.e. if you have a credit card then in the UK that shows someone that you have a credit history and that comes in useful when you want other goods and items on credit.
In some situations people do save a little money for their future. Typically, this is done with a retirement savings account, 401k or similar method. However, rarely is this money actually saved, instead they are usually using the money as an investment. Although, saving money for your golden years is a great idea, you should also save money that can be used in the event you have an emergency and need funds immediately.
It is wise to place $20 each week into a savings account. This money can add up to a fair amount in only a year. Make sure when you are paying your bills you include this amount in as a bill. This will give you emergency money or spending money that you might want or need in the future.
If you know you want to buy a new high priced item, instead of charging it, you should put the money into the savings account. This way, you are gaining money on the interest and not having to pay out interest rates on a credit card. A definite, win win situation.
It is unfortunate that in all the years we spend at school no-one teaches us financial education. One reason for this may be that the people who decide what is and is not included in the school syllabus are not themselves financially educated either. However, if you have read this article then you have an interest in the subject of debt. If you know someone who is in debt or you are someone who is in debt then please contact an organization that can counsel you for debt and if you live in the UK, the Citizens Advice Bureau may be able to help.
I hope you found this summary information of value. I recommend that you click on the ads and the links on this page to find the answer to your question.
