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How Much Money Should I Be Saving?

Posted By:  |  July 12, 2016  |  0 Comment(s)

To stay out of financial hardship, it is smart to pay close attention to how much income is being generated and spent. When looking into how much money one should save every month, the 50/20/30 rule is a good way to go.

  • 50% of income should be reserved for the essentials, like food and rent.
  • 30% should be set aside for lifestyle choices, like exercise classes, dinner out, etc.
  • 20% of the income is set aside for priority payments, like debt, savings and retirement funds.

These percentages are for one’s gross, after-tax income.

An emergency fund is also beneficial to have. With more than 5 million Americans unemployed for months at a time, an emergency fund can save people from going into major credit card debt. But how big should it be? Many experts in the industry recommend saving 9 months to a year in set-aside income; However, this can be a lot for people. It may be easier to start small, and save at least $100 a month, or 10% each paycheck.

Even just a mere $1000 saved up can be extremely helpful when an unexpected expense arises. Anything set aside helps. Each family should determine a set emergency amount to work up to, and start getting into the habit of saving.

What Are The Easiest Ways To Save Money?

1. Save Change

Even though it is a simple trick, saving change and coins can add up. Extra change is frequently overlooked, but coins can add a financial bonus if they are accumulated over time. Banks will even trade coins for bills.

2. Budget

Setting a budget can make all of the difference. Budgets can be used for grocery shopping, fun night outs and more. Once a specific amount has been set, stick to it. New technology and flashy gadgets can be tempting, but remember in the long run, it is better to save than spend. Don’t blow the budget.

3. Download A Money Tracking App

Smartphone users can download a variety of apps that help track income and spending. Apps like Mint allow users to see exactly how much money they are generating and what they are spending their income on. Users can even set budgets through the Mint app; they are sent alerts when one of their set budgets is exceeded. It is helpful to see where one’s money is really going. Those who don’t have smartphones can keep track of their finances with a spiral notebook or excel doc. Writing everything down, and seeing everything upfront can encourage people to save rather than spend.

4. Cut Extra Spending

That extra Starbucks Latte, the latest television, and that beautiful new purse are not necessities. Cutting out even the smallest thing, like a daily scone, can add up quicker than you might think.

To prevent the temptation of shopping, unsubscribe from retailer emails. Evaluate if cable and Netflix are both needed, or if one can be cut out. Cutting extra spending requires time and thought, but can truly save people hundreds of dollars.

5. Shop Smart

When shopping, especially for groceries, it is a smart idea to plan ahead. Make a list, and stick to it. Shop the sales and generic brands that are less expensive. Cutting coupons can also save more money than one may think. Smart shopping is what keeps people on budget.

How Much Money Are People in Debt Saving?

 

15-Day (30)

 

Not surprisingly, most of our visitors come to our site with some kind of debt (anywhere from under $10k to $100k).We surveyed over 200 people on BestDebtCompanys.com and asked them how much they are saving every month. Even though it’s recommended that you save 20% of your paycheck each month, only 3% of the people we surveyed are doing that. Instead, 71% of people aren’t saving any money. Those with debt are not able to put money aside for emergencies because they are stuck making minimum payments on credit cards that barely cover the interest.

If you want to save money, but are drowning in debt, the best thing you can do is work with a credit counselor. Credit counselors help you determine if settlement or consolidation is best for your current situation. They’ll help create a budget where you can pay off your credit cards and set aside a little bit of savings each month.

 

Links Used:

https://www.learnvest.com/knowledge-center/how-much-do-i-really-need-to-save/
http://www.bankrate.com/finance/savings/how-big-should-emergency-fund-be.aspx
http://www.moneyunder30.com/change-habits-stay-out-of-debt
http://money.usnews.com/money/personal-finance/slideshows/10-ways-to-cut-your-spending-this-week/9

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Poll

  • How important is it to you for a debt consolidation company to offer financial education resources?
  • Takes your existing debt and try to settle with your creditors for a lower amount. If you pay off the settled amount, your debt will be considered paid in full.
  • Negotiates with your creditors on your behalf.
  • Fee based on a percentage of your total starting debt or a percentage of the debt they save you.
  • Most settlement companies have you create a separate "escrow" account where you will make monthly contributions over a certain amount of time to contribute to your settlement. Once there is a substantial amount of funds to show your creditors, the settlement company will try to negotiate a lower amount of debt.
  • Combines all your debts and creditors into one monthly payment.
  • Allows you to pay one monthly payment to the consolidation company, instead of multiple payments to different creditors.
  • You no longer owe your original creditors; instead you pay one monthly payment to your consolidation company.
  • Consolidation companies can help negotiate lower interest rates on your debts and help lower your total debt payment in the long run. A lower interest rate will lower the amount you owe in the end.
  • Allows you to consolidate all your different debts into one personal loan that can be paid off over time.
  • Can offer borrowers a lower interest rate with a longer payback term (compared to high-interest credit cards or medical bills). This will lower the amount of money required to pay off the loan over time.
  • Personal loan debt consolidation can be an effective way to raise your credit score quickly (within 3-6 months).
  • Borrowers can receive funds from their loan within only a few days.

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