If one of your expenses is credit card payments and you are not paying all cards off every month, then you need to fix that. Getting out of debt is the best way to cut expenses. Interest every month is the most ridiculous thing to pay. You get nothing for your money. If you want to throw money in the garbage, pay interest.
Debt is very, very bad. We, as American citizens have been duped into believing that some debt is okay. It is not. You are not saving enough on your taxes to make your mortgage interest worth paying. Please read the previous sentence again. If you don’t believe me, do the math yourself. Go back to your truth in lending statement. It’s required for all mortgages nowadays. You can also get this information from your lender. Find the total amount of interest you will pay on this mortgage. It can be as much as twice the amount of the original loan. Now with this information in hand, call your accountant or calculate the totals yourself. Find out exactly how much money you will save on your taxes by claiming the mortgage interest. If you do not itemize, then your total tax benefit is zero. Some financial “gurus” will claim that you can take the cash that you are using to pay off your mortgage early and use it to invest. I have not found an investment that will make me several hundred thousand dollars in the next 10 years (which is the amount I will be saving by paying my mortgage off early). Chances are, you are not a savvy enough investor to make that much on investments. If you were, you wouldn’t need this book.
Credit cards and unsecured debt are the worst. You must get to a point where you don’t pay interest. Buy a good used car or pay off your car and keep it for at least 10 years. It makes more sense to put a little money into your car to keep it running than to spend a fortune on a new one. (Again, advertisers are good at this too).
If you don’t think you can do this, get help. I don’t believe credit counseling services are good for anyone except those who are very near bankruptcy. I found a great source for this help with this problem. Check out Greg Moore and his get out of debt solution. http://www.debtintowealth.com. If you have more discipline, you can find a great calculator for reducing debt by paying just a bit more on your loans in a specific order. You’ll find many great calculators at http://www.dinkytown.com including payoff accelerators, savings, mortgages, and more.
The easiest way to pay off debt is to list your monthly payments in order from smallest to largest. Now, pay the minimum on all payments except the first one. Pay as much as you can on that until it’s paid off. If you have money in a savings account, use that to pay off the smallest loan. When the smallest loan is paid off, take the amount of that former payment and add it to the next one. Chip away at that debt until it’s paid off. Next, take the payments and any extra cash and add it to the third payment. Continue this until you have paid off all your loans. One note about mortgage, I do believe that in today’s economy, it is difficult to buy a decent house without having a mortgage. Just make sure it is a reasonable payment. It should be a payment that you can make without sacrificing the rest of your debts and you should be able to pay extra to pay it off as soon as possible. We have all been fooled into thinking we need a bigger house than we really do.