Saving success: Advice anyone can follow to stick to their goals

In the past we’ve discussed ways to save money by spending less in order to get out of debt. Today I’ll be looking at ways to make your money grow when you’ve already conquered the debt mountain. It’s something to look forward to if you aren’t there yet. However, even if you still have debt, remember that you need to have an emergency fund and you should start contributing to that as soon as possible.

The first step to successful saving is setting saving goals. This article on How to Save Money sees anything from a house to a video game as short term goals because we can establish how much it is that we need to save or put towards down payments. Long term goals are those things that need more planning, like a retirement fund. You need to keep on top of this one to be sure you are saving enough to last you 20 to 30 years after you’ve retired!

With the retirement plan the time frame is easier to establish, although the amount you will be saving needs to increase as inflation increases to be sure that it doesn’t catch up with you. When you are saving for something, set a time-frame within which to achieve you goal. One car, saving for twenty months, one happy camper after twenty months!

 Be sure to set realistic goals that you can afford to stick to and reward yourself when you’ve succeeded. In this case the reward will be the car, but if you’re saving for something less exciting a reward is still in order. You need to feel like you’ve achieved something, because you have! And a reward will make you more motivated to save in the future. The reward can be something you’ve put off buying in your efforts to save. It’s always a good idea to wait before buying more expensive items as this will establish if you really need them.

The next part is less fun: keep track of every little expense you make for a month. Carry a notebook or download an app for your phone. Put the expenses into categories: food (but not treats like going to a restaurant), entertainment (include restaurant meals here), relaxation (something we often forget about, but it’s important for you overall health and sanity to relax), clothes, transport, fines, toiletries and so forth. Then look at how many of these items you can cut back on in the months to follow and basically trimming the unnecessary fat of your expenses. Set up a budget for each category and stick to it.

 Remember to go back to your saving goals often enough to see if they are realistic and if you are sticking to them. If your pay check minus your living expenses is still  less than what you intended to save per month after doing the debt diet described in the previous paragraph, you need to extend your goal and save for a longer time period or get a more realistic goal altogether. For instance: do you really need a brand new car with all the trimmings or will a small second hand model do the same job? It might even do a better job if you can find a second hand car with low fuel consumption.

In your efforts to save, don’t let credit cards hold you back! If you’re not religiously paying the full amount you spent back every month, they’re not worth the benefits as you will be making the credit card company rich instead of yourself!

Set up a savings account and put your savings as far away as possible so you’re not tempted to dig into them, they can accumulate interest and remember to set a debit order to pay your savings first thing every month.

If you’re saving over a long term, you can arrange that your employer pays the amount you want to save each month into that account so you never see it being transferred into your normal account and so it’s even easier to stick to saving. Just remember to keep track of the savings account in terms of how much you will have at the end of your savings’ time frame and if it will be enough.

I hope this gave you some valuable information on saving and planning for your future! Remember to reward yourself and to stay motivated. Debt free is great, saving is even better. You want that financial-stress-free feeling forever!

Getting into bad debt is not the worst thing that could happen

Financial struggles teach us a lot about ourselves and managing our finances

When you find yourself over indebted you may find yourself wondering if you’ll ever be able to turn your financial situation around and live a debt free, stress free life. Of course, not getting into debt in the first place would have been the smart thing to do, but sometimes unexpected situations cause us to be consumed by debt or we simply don’t have the skills to stick to our budget and over spend. Getting into debt should be hard, according to Roshawn Watson, a writer who advises people on getting out of debt, investing and building wealth. He says that the struggles will teach you how to spend your money in the future, how to plan more carefully and where to cut back.

He points out that some of the richest business people today have experienced great financial difficulties in the past, but it taught them how to be better at what they do. Having failed financially does not mean that you are a failure: it means that you will have to work harder at finding ways to earn an income, using your creativity, living wisely and making smart investment decisions in the future. You shouldn’t forget the sacrifices you made when you were in debt and how hard it was to be free of it again, because this will keep you from going down that path again and seeing the warning signs early on.

One of the ways in which South Africans can save themselves from the debt trap is to apply for debt review. The simple reason being that if you cannot keep up with your repayments, you are probably over indebted and the last thing you should do is take out another loan to pay all of the others. If you couldn’t cover your living expenses and loan repayments this month, how will you learn to cut back enough to add ANOTHER loan’s repayment to your expenses by the next month? Debt review is especially valuable for people who have a bad credit record, don’t have assets to use as collateral to consolidate their loans and feel that they have gotten themselves in way over their heads with the amount of repayments they have to make every month.

Debt review forces you to take responsibility for you income because the debt counsellor works out a budget for your monthly expenses and you have to stick to it. Failing to do so will mean that you simply won’t have any money. Those under debt review cannot take out any more loans and if you try and skip on repaying your creditors they have the right to cancel the review and take you to court. However, debt review also takes a lot of stress off the person’s shoulders. The debt counsellor arranges restructured payments with their client’s creditors and handles the legal aspects thereof. The consumer has the right to work through the debt counsellor and creditors will be notified to only contact the counsellor during the review process.

Even though debt review means that people will have to make some lifestyle adjustments and give up their creature comforts and make other sacrifices, most consumers welcome it. It’s currently the most effective way for creditors to be repaid and for consumers to be protected from their creditors while getting the financial advice they need. Once you have completed debt review, you will receive a certificate and this will allow you to qualify for credit again. However, after going through the lengthy and often painful process of paying back all their debt, smart people work to make sure that they stay far away from being over indebted again and strive to use their credit wisely.

Indeed, credit can open a lot of doors for us: think of home loans, car loans, student loans and credit cards in an emergency. Without these, our lives would be much harder. However, they come with the major responsibility of paying them back. Don’t allow credit to take away your freedom, but use it to better your life; for instance the independence of owning a car or the opportunity to pay off your own place.

Image licensed to Itani stock photos