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Budgeting For Financial Success
As Interest Rates come down and the pain of the last couple of years wears off it may pay for you to asses your current financial position.
You have recently been faced with tightening you belt in the area of you may have done well or you may have found it hard going. Either way you made it. Planning ahead from this point for the next 2 -3 years will allow you to live a life that will benefit you when rates start to move back up again.
Thinking about when rates are going to go back up and how you are going to use the next 2 – 3 years of low interest rates to put yourself in a better position. All financially successful people take this time to keep paying into their loan what they were paying when the rates were at their highest. Over a period of 2 – 3 years this your loan balance, thus saving you all of that compounding interest.
The 10 steps below are designed to assist you with taking the next period of low rate cycle to put you in a position to move ahead quicker.
Step 1:
Take a good look at where you are now. You can’t get somewhere unless you know where you are right now. Write down every fixed and variable expense that you currently have.
Step 2:
Write down all of your income for your household. Include overtime only if it is regular.
Step 3:
Subtract your expenses from your income. Now if there is a positive balance take all of that balance and load it onto the home loan. If you have other debts that you want to get rid of then ensure that your home loan has a redraw facility.
Step 4:
Work out all of your current debts and the time line for when they will all be paid off using the minimum payments. Now the idea of paying extra into the home loan is a cash flow issue. You see if you have a car loan and you load all of your extra money into it at the start and something unforeseen happens then you can’t go to the car loan financier and ask for your extra repayments back, where as with the home loan you can through the redraw facility.
Step 5:
Sit down and write all of your loans, credit cards and store cards in a list putting the highest interest rate items at the top.
Step 6:
Now take the top debt and calculate by using the extra money you will pay into the home loan when you can clear the top debt using a redraw when you will have enough money in the redraw facility. Write that date onto your calendar. You see by putting the extra payment into the home loan you are still saving interest but this way you can sleep at night knowing money.
Step 7:
Now calculate from the time that you pay off the first debt, how much extra money you will be putting into the home loan. This will consist of the original minimum payment you were making to the first debt + the extra money you were putting into the home loan.
Step 8:
By using the method in Step 6 work out when you can clear he second debt out. Write the date down on your calendar
Step 9:
Do the same for all of your debts until they are cleared. Can you see how fast this works. By the time you get to the last debt you are using all of the minimum repayments from all of your previous debts and the original extra repayment on your home loan to get rid of the last debt.
Step 10:
When all of your debts are gone take all of the repayments you were making and put them into your home loan. This will then dramatically decrease your loan balance and start to give you a sense of great achievement. Everyone who has used this formula and persisted with it to the end has had fantastic results and you can to.
Good Luck
This Article Brought to You By Diamond Finance
