Everybody loves having more money for themselves and their family, and everyone loves owing less money to fewer people. In the second installment of our “Best Financial Advice I Ever Received” series, real estate loan officer Matt Burkey discusses creating a budget, saving for larger purchasesand decreasing your debt.
Creating a budget, committing to saving and making additional payments are easy ways to stay on top of your finances.
“Create a budget and follow it. It puts a plan in place for your money and helps you develop goals for monthly/annual savings,” Matt said. If you see where your money is going, you’re more likely to be careful with it and spend less of it. Additionally, having a goal gives you something specific to shoot for instead of trying to blindly save money.
“Save money for down payments on large purchases,” Matt added. “This gives you the ability to make these purchases, as well as helps save you money by not having to pay additional interest costs and reducing PMI (private mortgage insurance) costs, or eliminating them all together.” Interest can build up fast especially on larger amounts. The more money you can put down, the smaller the remaining balance is and the slower the interest will grow. Before purchasing a house, car or other large item, make sure you know how much you need to have saved up to make a large enough down payment.
Finally, Matt said, “Make additional payments on your debt even if it is just in small amounts. It reduces interest paid, and helps increase equity and net worth faster.” If you have some leftover funds after you’ve gone through your budget, you can save it. However, it also makes great financial sense to make an additional payment on your debt. Again, this will help decrease the amount of interest you pay because of the lower remaining balance on your debt. It will also help with your credit as you build up a payment history.
It is never too late to start good financial habits, so see if there are places in your life where you can implement Matt’s tips. We’ll have another Northeast Security Bank staff member’s financial advice next month, so be sure to check back. We also have another blog post coming later this month about reducing debt, so you won’t want to miss that! Tags: budget, debt reduction, savings