When it comes to money; that is, saving money, there are universal rules that apply to us all.
If the basic rules of saving were heeded by all we would live in a society of comfortable wealth. Instead, more than 50 percent of the population lives paycheck to paycheck, which would suggest that the golden rules of sort are ignored quite easily.
Take for instance something as simple as your vehicle. That bright, shiny new car has that new car smell but when it comes to buying that over a used one, something stinks. The problem is you can save thousands of dollars on a used car, even though it might have a little mileage under its belt. Car payments don’t have to be your life or a monthly expense you simply can never live without. Used cars are just as good and reliable as their new counterparts, particularly with how warranties are structured as far as duration goes.
One of the more discussed ways to save money centers on a topic that is quite the hot button, polarizing issue: credit cards. Specifically, how exactly do you not only manage that debt but what about the actual interest rates.
Rule of thumb suggests that you should steer clear of department store cards due to their obscenely high interest rates. Shopper perks tend to grab the attention of consumers, and that typically leads to opening up that line of credit. If you can’t pay it off in one shot within 30 days, you’d be better off not opening up the card at all.
For your Visa, Mastercard, Discover and other cards of that ilk, you have two schools of thought that both work. One method suggests you pay the minimum on all your cards and focus your attention on the card with the smallest balance first to get it paid off, so you can see and feel the progress you’re making.
Another option is to put as much extra cash on the card with the highest interest rate to get that one paid off first, so you’re not throwing money away on interest by making only the minimum payment or not much more than that on cards with 20 plus percent interest on them.
Saving money isn’t about following what others do, but some steadfast rules are hard to ignore, quite simply because they’re time tested and have worked for years to pay down debt and subsequently save money.
Previous: Fast Forwarding: How to know when you’re ready to retire Next: Save-cation: How to save on your summer vacation