Debts are ruling the roost these days. I heard some people saying that if the conditions remain the same, U.S will be remembered as the debt man of the world. Almost half of the U.S population is severely affected by the current economic quagmire while the rest half is waiting for its turn to go bankrupt or foreclosed.
These are indeed very tough times and there is no doubt that we badly need some magical solution to our financial ills. But we also know that there is no genie which can save us from this mayhem.
I will not talk about the big ways of getting the act together nor will discuss any financial jargon here. Following are 8 baby steps to debt reduction and living a happy life, it can be a big help for couples.
1. Setting up a crisis management fund
The ideal way to kick off the rescue plan is to start funding a reserve which can be used in case of extreme emergency like a foreclosure which can’t be stopped. If you have sizeable amount in the fund, you can protect your property.
2. Collaborative thinking
An ideal couple is one that sticks together through thick and thin. Talk to each other and develop a workable strategy which you both think will be the best for you.
3. Save big bucks – at least equal to 8 months salary
Try to save as much as you can and pool in that extra cash; ideally equivalent of your eight months salary or at least five to six months income. This reserve can be used in case of untoward situation.
4. Small things are better
Debt management can be optimized in a more perfect manner if you try settling up smaller loans. This strategy will enable you to clear all the smaller and medium-sized debts in a go.
5. College education fund should never be compromised
American parents are facing one of the biggest fear of their lives – to give away college education funding of their children to banks and savings institutions. You can avoid that by having a steady and unbreakable stream of dollars going for this fund on a monthly basis. You have to manage this at any cost.
6. Avoid retirement woes
Retirement is another difficult time of our lives but if both of you have enough savings, there is no need to worry about. Start with saving 5%-10% of your monthly salary into this fund and you can increase the amount when suitable.
7. Clear home loans as first priority
Clearing any debts on your home should be your first priority as foreclosures are so difficult to avoid otherwise. If you are over with this, you can manage other debts pretty easily.
8. Invest with your mind, not heart
Don’t follow the crowd in making investments. Try investing in safe avenues or you can also try your luck in new sectors like renewable energy which has a bright future.