Layer Savings To Reach Long-Term Goals with Strategic Planning

Debt is something that everyone has these days. Some have less amount of it and find it well manageable while other carry large amounts in multiple loan accounts losing their sleep and money over it.

  • These people who have large amounts of debt cannot save money for their better future or even for an emergency situation.
  • On the contrary, people who have little debts can reach to both their savings for retirements as well as paying off debts quickly very easily.

It all depends on your current cash flow, in and out. If you earn well and have fewer amounts to repay, you will save. On the other hand, if your earning is less but your debt payments are more, you will have less or no savings but will surely stay in debt more a longer time, if not always and forever!

In such situations, on useful approach that you can take is to pay your debts off more aggressively. You may assume that your savings will increase in the future as and when your income increases. This will help you to pay off your debts as well.

Layering savings

Assume that you can save up to $30,000 per year for the next couple of years by paying off your debts continually. This same figure may increase to $40,000 per year when you pay off a second mortgage.Such savings layering can transform a marginally successful looking plan into one that has a high very rate of possibility of success.

The primary aspect of layering savings is to evade lifestyle sidle. This is a situation when you suddenly realize that you have more expensive tastes in you as and when your income increases.

However, paying off debt is a longterm project for most of the people. In order to achieve this, you will have to do two things namely:

  • Prioritize your debts to find out which needs to be paid down before and faster and
  • Strike a perfect balance between retiring in debt and saving.

This will help you to pay off your debts to achieve your financial goals within its longterm context.

However, both of these are not easy tasks. You will need to make a perfect decision to find out whether or not you should use any extra cash to pay off your debt or stick to the normal way of repaying it so that you can maintain steady and free cash follow. There are a few other things to consider for this such as:

  • How much of cash flow you have
  • How comfortable you are with your debt or debts and
  • How you weigh debt payments, savings and investments.

This will help you to see which best option will work for or against you. This will also help you to avoid debt stress and the hassles of looking for debt relief options at or any other for that matter.

Tips to make a choice

Especially, when you have enough money in hand left over and thing turn out to be going very well and as expected at the end of every month, it may be very difficult to make the right choice of options. To help you choose the right option, here are a few tips to follow:

  • First, you will need to have a general sense of the number that will determine your cash flow is good enough to pay your debt off and save.
  • Second, you will need to have design a detailed budget to arrive at the final number of your cash flow.
  • Third, you will need to prioritize your debts in order to manage it well as per your present economic situation.

Next up, you must find out your comfort level while carrying debt with you. Yes, it is true that most of the people in today’s society are comfortable in carrying debt but it may not be the case for you. It is all about the money you earn and have in hand for disposal.

You may be like the handful of people who simply do not like any debt amount against their name. Even if they incur any, such as while making a purchase using their credit card, they tend to pay it off as soon as possible regardless of what the numbers may imply.

Therefore, making a choice between saving and repaying debts off is a matter of:

  • Personal choice
  • Amount of money available at a particular moment to pay off the debt
  • The comfort level with or without debt and
  • The long term and short term benefits and consequences.

However, if you choose to pay your debts off quickly and then save, make sure that amount of decrease in savings associated with in in the short term is logical enough and will not threaten your ability with unbeatable challenges to meet your ultimate financial goals.

Concept of ‘carry’

You may have come across the term ‘carry’ when people speak about debt. You may have come across it a couple of times in this article as well but you may not know what ‘carry’ actually means.

The term ‘carry’ actually refers to the difference of the amount you pay in the form of interest on your loan and the amount that you could have earned as an interest on that amount saved if you invested on something else that yields. That is why debt is also considered as a ‘burden’ or ‘load.’

For example, if you have a credit card debt that charges 19.5% interest.You know that you will pay more as interest on the credit card debt than you can earn in a money market by investing the same amount. In such a case it is unwise to ‘carry’ the debt for inexplicable reasons.

Therefore, the last and probably the most important step for layering savings is to determine how much debt you should carry, and this is not a very difficult task. All you have to do is consider the rate of interest and the tenure of the loan.


Saving Money The Victorian Way

header1Now we’ve rung in the New Year, many of us will be looking at our bank balances and feeling twinges of regret about our overspending during the holiday period.  According to Forbes Magazine, consumers who took on additional debt this holiday season added an average of $1,003 to their balances. The burden of debt can have a huge impact on both our emotional and physical wellbeing, leading to stress, anxiety, and sleepless night.

If you’re struggling with debt, or have simply overspent and would like to tighten your belt in order to get your budget back under control, then why not look to our Victorian past for a huge wealth of fun ideas on how to save money? Frugality and resourcefulness are both key buzzwords for describing the lifestyles of most Victorians, regardless of their class and social status. Victorian people made do with what they had and were incredibly resourceful when it came to finding what they needed without expense.  Here are some ideas on how you can adopt this philosophy to suit your own lifestyle:

Repair Rather Than Replace

Victorians didn’t have wardrobes overflowing with clothes in the way that so many of us do: they certainly didn’t feel the need to wear a new outfit for every social occasion they attended. Clothes were not purchased off the rack: each gown worn by a woman, for example, would be made either by a professional seamstress or (if finances didn’t allow) hand sewn at home. As a result, dresses were often repurposed and updated to suit changing fashions, and repaired when they were showing signs of wear, rather than simply discarded. Modern money savers can learn a lot from this Victorian model: why not learn some simple sewing techniques? It is much more cost effective to replace a button than buy a new coat, and small holes in garments can be repaired very simply with minimal skill and technique. By repairing rather than replacing clothes, and other items around the home, you’ll be amazed at how much money you can save: that money would be much better spend on removing the burden of your debt and living a debt free life than on continued consumerism and things you don’t really need .

Ditch Your Car

Very few Victorians had their own personal transportation: the Victorian era was the era in which public transport became more easy and convenient to use than ever. Regular buses, trams, and even a rudimentary underground railway system (which would later become the subway) were all established during the Victorian era. Taking public transport is easy, cost effective, and what’s more it’s also great for the environment. Contrary to popular belief, nearly all forms of public transport pose less of a cost to the average commuter than driving and, thanks to increasing congestion and traffic, you can often reach your destination much faster if you are travelling by public transport too. Why not ditch the car (at least for a couple of months) and see how much money you could save on gas, parking, and car maintenance expenses? You might even find that taking public transport is so convenient that you never want to jump in your car for simple journeys again!

Grow Your Own Vegetables

Why not make like a Victorian and use your backyard space to grow something useful, such as vegetables? No matter how big or small their outdoor space, the Victorians often utilized this to grow vegetables in order to ensure they had access to a nutritious meal without having to spend any more. What’s more growing your own vegetables is a fun and inexpensive hobby that you can involve the whole family in, and it provides a great lesson for children about where food comes from, as well as encouraging them to spend more time outdoors. Carrots, tomatoes, potatoes and cucumbers are all very simple to grow for a beginner, and you will soon be able to eat and enjoy the fruits of your labour, whilst watching your grocery store bills decrease as a result. Have a large yard and enjoy the idea of growing your own food? Why not consider buying some chickens and a small chicken coop: much cheaper to own as a family pet than a cat or dog, when you own chickens of your own you will always have a ready supply of eggs for breakfast!