Are you struggling with credit card debt? Never seem to be able to get ahead? Having trouble saving for a new car or home mortgage? If so, you’re not alone.
A CareerBuilder survey found that 78 percent of American workers live paycheck to paycheck, including nearly one in 10 who make more than $100,000 a year. The survey also found that less than a third of workers stick to a budget and 26 percent set aside no money each month for savings.
In the land of plenty, struggling with money has practically become a way of life for most Americans. But, it doesn’t have to be that way.
“While a lot of financial hardship may be due to circumstances beyond someone’s control, budgeting offers a way for the rest of us to take control of our finances and maximize the money we earn,” according to award-winning personal finance author Holly Johnson. “Those who budget already know that planning your spending and saving is the best way to solve common financial problems that plague people today – things like a lack of emergency savings or a paycheck-to-paycheck existence.”
There are countless creative ways to pay off debt, but none are as tried-and-true as creating a realistic budget and sticking to it. Johnson discusses how budgeting can fix these three common financial woes on the financial freedom blog The Simple Dollar:
1. You’re not saving any money
“One of the biggest perks of budgeting is that it forces you to save money as you reduce financial waste. As your budget teaches you how to spend less, you may also find you have more money to save every month.”
2. You have trouble keeping track of bills.
“Making consistent, on-time payments is the No. 1 factor in your credit score. A budget makes it easy to organize paying bills because you’re always keeping track of which bills are due, which are coming, and which ones you’ve already paid.”
3. You often face cash flow problems.
“The planning aspect of budgeting can also help you manage cash flow better. When you know which bills are due and when, and your expenses are less than your income, it’s a lot easier to stay on track and never run out of cash when you need it.”
One strategy to ease these three financial woes and others is using an automated loan acceleration service. Think of it as an online loan payment concierge that can:
- Save you money on interest payments
- Shorten the terms of your loans
- Accelerate the equity in your auto or home
- Automate your bill payments
There are a number of payment acceleration options to consider that coincide with when you get paid. They include weekly, biweekly, bimonthly and monthly withdrawals. The most popular payment option is biweekly because that’s how most people are paid.
It works using simple math. Standard loans require one payment every month. Biweekly loan payments divide this payment in half and pay that amount every two weeks. Because there are 52 weeks in a year, you make 26 biweekly payments over the course of a year (the equivalent of 13 monthly payments) with the extra payments applied to the principal. On a monthly basis, the payment amount is the same. However, an extra month’s payment a year can reduce interest charges, shorten the term of the loan and accelerate equity.
Look for an automated loan acceleration company that provides the added value of personal financial management services. For instance, AutoPayPlus includes a financial planning toolkit that makes it easier to automate your bill payments, organize your finances, monitor your credit, and create a budget and savings plan for the future – all in one place.
The goal of a budget is like the two sides of a coin. On the one side is paying down debt. On the other side is saving for the future.
There are many different ways you can work toward paying off your debt. It doesn’t have to be difficult or complicated. In fact, getting started can be pretty simple. Check out this list for how to pay off debt. Not surprisingly, the first step is setting up a household budget.
For the saving for the future side of the coin, smart savings and debt management strategies can help you build wealth. And with wealth comes freedom from worry, more opportunity, and the ability to enjoy your life and control your own destiny. In short, achieving the “American Dream” in the land of plenty.