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3 Money Hacks You Really Should Know

  • December 18, 2017

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I have a great contributed post for you today on understanding debt. It’s for informational purposes only, so please consult a financial professional before making any money decisions. Got it?

understanding debt

Debt is the kind of four letter word that is taboo with most people. We shrug it off, pretend it isn’t there and deny all knowledge and yet you know that you aren’t sleeping at night because you need to find a solution.

Worrying isn’t going to help you here. Instead, you need to focus your energies on understanding debt and how you can make it work in your favor. Tackling any issue head on is the best way to go about solving it, so stop burying your head in the sand and make a plan.

There is plenty of help out there, not least the good people at, who will be able to devise a personalized strategy to eliminate your debt over time and give you realistic methods for increasing your income. But, in the meantime, you need to understand debt, not just as a panic in the middle of the night, but as a process.

Some Debt is Good Debt

Debt. Bad. Two words that go hand in hand. But not all debt is bad debt. Some debt is good. For example, if you take out a loan in order to go to university to study and increase your career prospects, this is good debt. It signifies an investment into your future as well as the potential to increase the prospects of a good wage. Similarly, a mortgage is a good debt because now you have a home.

Bad debt is when you use your credit card to buy something you don’t need and can’t pay it off in time. Bad debt is when you are already struggling to make ends meet and you are stuck in a high interest loan that increases every month, decreasing your chances of ever paying it off.

Understanding the difference between the two is vital.

Learning to Live Within Your Means

The second lesson in understanding debt is the realization that you must learn to live within your means. Essentially, you must not exceed your monthly income. For lots of people, especially those already saddled with debt, this is easier said than done and you might require a financial advisor to help sort out what your income actually is and where it is going.

For now though, write a list of all your debts and their monthly payments, including the interest rates and any set terms of repayment such as a time limit. This will help you to prioritize which debts to repay first. Focus on repaying the high interest loans first and then move on to the lower rates. This should help to reduce the amount of interest you end up paying and will save you money.

Once you have your debts in order, you need to make sure that you can live within your income. You may find that you can save money by switching energy provider or going to a cheaper supermarket for your weekly shop and you should look into other ways to budget your expenditure. You can also look into ways to earn extra money on the side of your job to boost your income. Even a few dollars here and there could be a real help and should be considered. There are lots of things you can do to earn extra over the year from a yard sale of your old clothes to writing a blog or doing online surveys.

Related: Simple Money Saving Tips To Give Your Budget A Serious Boost

When to Save and How

You might think that saving while you are in debt is impossible, and for some people, it may be. However, if you have a student loan, for example, it might be that since you are paying a fixed rate over a number of years, it isn’t really worth overpaying to get rid of the loan sooner. Especially if the interest rates are fairly low. Instead, you can channel this money into savings accounts to give yourself an emergency fund.

One of the easiest ways to save is to set up automatic transfers from your bank account to your savings account each month on pay day. This way, you won’t feel like you are missing the money and you won’t have to remember to do anything.

Understanding your debt and knowing that you can make things better is so much healthier an attitude to have than ignoring the problem and hoping it will go away. Finances are difficult to manage when you haven’t really got much experience, but there are lots of ways you can get help. And once you are back in black, everything you have learned will help to ensure that the red stays a thing of the past.

3 Money Hacks You Really Should Know