The Most Effective Ways To Get Out Of Debt and Save (Part 2)

 by: Michael Saunders

Save! Save! Save!: If you can't start saving 20% of your monthly net income or 75% of your monthly disposable income right now, then start off with less, and gradually increase the amount. By practicing money-saving techniques, you will find extra money during the month that you didn't even know existed.

Once It's in Savings, Leave It There: A good rule of thumb for us all: Once it goes into your savings account, leave it there. If you make it a habit of withdrawing from your savings for this or that "emergency," then you will have a hard time building up and maintaining an amount in your account to accomplish your long-term financial goals.

When and only when you are ready to complete one of your financial goals, like to pay off your car or mortgage loan, should you withdraw the money from your savings. By following this simple rule of thumb, you should expect to accomplish your goals and at a much faster pace.

Establish a Cash Reserve: A cash reserve is a portion of your income you've saved that you can fall back on if you ever have to. Hopefully, you will never have to, but it is better to have it if you ever need it, than to not have it and really need it. We recommend that you build up and keep a cash reserve that is equivalent to your living expenses for six months. By doing this, you will have several months to regain financial stability in case of a sudden loss of income.  (continued...)
The Most Effective Ways To Get Out Of Debt and Save (Part 2)
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About The Author

Michael Saunders has an MBA from the Stanford Graduate School of Business. He edits a site on Credit Repair and Debt Consolidation and is president of Information Organizers, LLC.

Link Group Ltd., a rent and sale home provider, has been named 'Scottish Social Enterprise of the Year’ in the 2013 Social Enterprise Scotland awards.

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