Personal Finance – How To Save Money and Avoid Debt

Letandrsquo;s face it, everyone today seems to be living off from debt. Nobody seems to tink about how tosave money. They have so many bills and so little cash that many people have in turn resorted to paying off some debts with other debts which in turn piles up even more fees and the like. For most people this is how it all starts. They begin with a simple credit card with the thoughts of building up their credit rating so that some day they can purchase a home. But then something happens whether it is medical or job related and they find themselves unable to pay their bills.

Then they remember that they do after all have a credit card in their wallet and under the impression that they will be able to get back on their feet they make the decision to use that card to pay off the bills. Of course nothing happens as it is planned and one thing leads to another. Before anyone knows it the bills have piled up again and there is nothing left on the card. But thatandrsquo;s ok because getting another card is simple seeing as though they have been paying all of their bills on time. Before anyone knows it, the bills have begun to pile up to the point that it is almost impossible to turn things around without having to file for bankruptcy.

However, this all could have been avoided if one takes the time to save money. Ok, grated, your pay is not all that great and there are many other things you can do with your extra cash rather then throw it into a bank account to sit. But in doing so, you never have the cash on hand for when you really need it. This is one of the things that can lead to building up expansive debt, which is why savings is so important.

Of course it does not help any that savings accounts are practically worthless today and the very little you get in interest does not seem worth it. However, if you are setting only 10% of your income aside every paycheck, after a full year it is like having an extra monthandrsquo;s pay on hand for when it is needed. Without even thinking about any interest, you can very easily set aside 10% of your weekly income.

If you are making a measly $150 per week, and setting aside only $15 of that every week, then after 52 weeks you will have $780 saved up. If you figure that you are only making $600 per month, then you can see how that extra amount can seem really nice. Then if you want to also include the small interest rates you receive on a savings account these days, you can assume something like 2%. Most banks pay this out quarterly, or every 13 weeks. As such, the first quarter you will have set aside $195 and get a whopping $3.90 in interest. Doesnandrsquo;t seem like much, but it is after all 1/5th of what you set aside weekly. By the second quarter you will have amassed $393.90 plus the 2%; but this time that 2% is half of your weekly savings. The third quarter will put you at $596.78 which is an entire monthandrsquo;s pay plus that measly 2%. This time that little 2% is equal to the amount you set aside every week. By the fourth quarter, you will have $803.72 which is an addition $23 over the amount that does not include interest. But you also have to add the 4th quarter interest which brings the total to $819.80; an increase of almost $40 extra after a full year.

Now, if you want to have some real fun, time your savingandrsquo;s year to start and end in the tax season so you can get those taxes back at the same time. If you are only making $150 per week, then the chances of your refund plus your savings coming out to more then $2,000 is very likely. So start now and save money, you’ll be able to avoid debt.