GOOD $ENSE BUDGET COURSE: SAVINGS VS DEBTS

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Normally every time we control our balnce, we would like to save more, have less debts but for several reasons sometimes this isn't an easy way.
If you're just graduated you could find yourself in two situation:
a-without debts but now welcome to real world you need to start to pay for your things (rent, bills, insurances, fun etc) your parents must to stop you're Adult now;
b- you've have a student loan to repay, have a full time job and you already pay for your things but you would like to have a better account.


One of first thing I've bught when I decided to have a budget and save, is been a blinded piggy bank that you can break only when it is full or if you prefer you can switch part of your monthly paycheck into an account opened only to deposit your savings.
If you put on it €100 and % is 10% per year
YEAR 1
 €100
 %=10
YEAR 2
 €110
 %=11
YEAR 3
 E121
 %=12,1

During the first year the increase is really slowly but try to imagine a potential increase for the next 10-20 years, what you need is to be patient.

First thing you need to do is create a realistic budget and if you understand you would must to earn a little bit more, say to your collegues that you are available to do baby sitting and/or dog sitting during week end, every couple with kids and/or animals need to have some moment for "adult only".

Following priorities from Society point of you:
  1. Lifestyle: society choose what's in and out, chose what food you must to eat, what kind of clothes, car, work you must to have.
  2. Debt: if you want to keep a expensive lifestyle you probably are spending more than you are earning, so you are in debt to follow the mass,
  3. Saving: Having debts for luxury lifestyle doesn't permit you to save almost nothing if you want to repay the debt
  4. Give: If you aren't able to save, also if you'd want to give, you cannot
PRiorities from God points of view:
  1. Give: decide a realistic amount that you want to give and eliminate it every month from your paycheck 
  2. Save: To don't be tempted to spend this amount for stupid and not necessary things, use bank account so automatically every month a portion of your paychech will arrive in your deposit bank account
  3. Lifestyle Understand realistic the kind of lifestyle you can have and afford. Be honest with yourself if you cannot eat in fancy restaurant daily don't do, but be REALISTIC with yoursel.
Maybe you are sayng, yes it is right but I already have a debt:

  1. Give at least something
  2. Saving a minimum amount monthly (using piggy bank or deposit account)
  3. Debt repay the max is possible
  4. Lifestyle: Start to have a frugal life, yes I know it could be hard on the beginning but day by day you will discover that is possible to have a rich and full live also if you are living cheap.
CREDIT CARD

At the beginning it seems solution because  you can buy a lot of things but you must to know that you need to repay all the amount of credit card debt and sometimes you could pay more than you spent.
If you are in debt for €7200 (with 18.1% annual) and the minimum amount is 2% of the debt €144

MONTHLY
 TOTAL PAID
 DURATION
Minimum monthly
 € 23.049,00
 +30 years
144
 € 13.397,00
 8 years
144+100 monthly
 € 9.570,00
 3

is better to don't have debts or if  you have try to repay it more quickly is possible,  a friend of mine wanted absolutely go in esotic place but she cannot afford having a mortage to pay, so she found a second job for week end in a restaurant and she put all the income of second job in a piggy bank and in 6 months she had the amount for the travel, if you need to have more money search for new incomes (baby sitting, dog sitting, tutoring, waitress, garage sale and more).

Another friend of mine use only debt card so she mustn pay interests on it, and she try to pay everything cash anduse the card only when it is really necessary.

Have a scheme, excel will help you where you can write your financial goals for savings and debts, so you will resist to tempation to overspend.


What Bible says about debt:
Luke 12:15
Proverbs 37:21
Luke 12:30-31
Ecclesiastes 7:14
Psalm 37:21

Next time we will talk about spending

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