BOSTON (CBS) – Yesterday I told you about a website I found, The Simple Dollar and the founder Trent Hamm. We have more of his simple rules today.
Focus on eliminating high-interest debt. Your next goal is eliminating your high-interest credit card debt. Set up a simple debt repayment plan by organizing your debts by interest rate, then attempt to make a double payment (or more) on whatever debt has the highest interest rate.
Make that double payment every month, then when that debt is gone, add the total amount of that payment to the payment you’re making on the next debt on the list. Keep repeating until your debt is gone.
This strategy worked very well for Trent and he was able to pay down his debt in 8 months. Then be sure to pay off your credit card bill in full each month so you don’t land in hole again.
Request rate reductions on your debts, especially credit card debts. If you owe any debts, it never hurts to look into the possibility of reducing your interest rates on those debts. For credit cards, it’s as easy as simply calling up your credit card company and asking for a reduction. For other bills, such as student loans, a consolidation can lower your interest rate. With your mortgage, a refinancing can reduce your rate dramatically.
Lowering interest rates can both reduce your monthly payments and reduce the total amount of interest that you pay over the life of a loan, so any reduction you can get is a good thing for your wallet.
Teach your children about smart personal finance from day one and be a good example. Talk to your children about money starting from the earliest age. Explain to them the virtues of spending less than you earn and not getting yourself into debt. Even more than talking, live those lessons in front of your children. Don’t just talk about it, do it.
Show them how it’s done in your day to day actions. If you talk about spending less than you earn and then do it in your day to day life, the lessons are much more likely to stick.