Pay Yourself First
It’s typical in today’s world that after getting your paycheck and paying your bills, having anything left to contribute to your savings doesn’t seem possible. A better plan would be to pay yourself first. Don’t let the money get into your hands. You might find that you actually begin to grow your savings much quicker this way.
If you have a 401K plan, the first thing you should do is to fund it to the max. If you can’t afford that, at least put enough in to get the full matching contribution form your employer. This investment is made before taxes. Your investment is larger and with the employers contribution, it will grow quickly.
The next thing to do is to have a brokerage or mutual fund company debit your banking account monthly. This money should first go into an IRA, if you have five years or more to go to retirement, make it a Roth IRA.
Next have a few dollars more be debited to go into a no-load, low cost mutual fund. After doing so, then figure out how to pay your bills and living expenses. If money is tight, cut back on your living expenses and use the extra money to pay down your debt. Start with the lowest balance first. Once that debt is paid, take the amount of money you were paying on that debt and add it to the payment on the next lowest balance debt. Continue doing this and you can be totally debt free within 5 to 7 years.
Another version of this method is paying the highest interest rate debt first. The principal is the same, you just see more progress with the first method, although it could be more costly based on how your debt is distributed. The idea is to scrimp at the expense of your current lifestyle, while leaving your savings to grow and you debt to shrink. Also, be sure to have a savings account online. With all these steps, you’ll be rewarded greatly! This may seem like an impossible plan to execute but it can be done. This is a doable plan and can certainly work with a little will power.