Best Money Tips For Everyone by Malaysia Money Coach

Snowballing is all about paying your debts in the correct order. I suggest you pay the debt with the smallest balance and the shortest tenure first. That can help you feel you’re getting rid of the debt quicker thus, creating the momentum.

The idea of snowballing is to single out the debt with the smallest amount and the shortest tenure as your target, and throw all the money you can at it whilst making normal monthly payments on all the other debts.

Once you’ve paid off your first target debt, you then use all that freed-up money to tackle the next one on your list.

You will see that the “snowball” gets bigger and bigger as you have more and more freed-up money after the earlier debts have been settled. If you’d just made the same payments on your list, it would have taken you much longer to clear your debts. By using this method, you’ll be debt-free sonner.

If you are considering a debt consolidation, think carefully about it. It is almost always cheaper to snowball your debt, and often people who consolidate their debts ended up in more debts because they haven’t addressed the main issue: they spent too much.

Try debt snowball method to clear your debts, you’ll be amazed by how simple you can systematically clear your debt in  no time. I will provide you with some tips in debt snowballing in my coming articles.

Know the warning signs of too much debt

Credit is great when it’s used wisely, but more and more people are getting in over their heads and threatening their financial futures.

Just because you can pay your minimum payments each month doesn’t mean you don’t have a credit problem. Remember, low minimum payments benefit the credit card company, not you. They are the means by which many people become enslaved to their debt, taking decades to pay off purchases whose prices have become grossly inflated by interest charges that have accumulated for years. This is how credit card companies make their money.

Don’t allow yourself to be lulled into a false sense of security that you have your debt under control just because you’re not late on any payments and you can manage the monthly minimums.
 

Here are some of the warning signs that you have a credit/debt problem.
 
1. You don’t have any savings or an emergency fund.
2. You make minimum payments on your credit cards.
3. You use credit cards for things you used to buy with cash, such as groceries.
4. You use increasing amounts of your total income to pay off debts.
5. You have more than two or three major credit cards.
6. After you pay your credit card bill, you increase your balance by the same amount     (or more) the following month.
7. You’re at or near your credit limit on your credit cards.
8. You’re unsure of the total amount you owe on all your debts.
9. You take out cash advances on your credit card to pay other bills.
10. You’ve tried to make a purchase with your credit card and been declined.
11. You’ve been denied credit. 
12. You get calls from collectors.
13. You hide or lie to your spouse or other family member about your spending or hide credit card statements from family members.
14. You have the urge to borrow from loan-sharks.

If you realize that you are in over your head, the sooner you act, the easier it will be to get out from under the burden of debt. Beware of companies that promise to fix your credit or debt consolidation companies. There’s no easy fix, but it is possible to turn your finances around if you work at it.
 

Common Roadblocks to Wealth Building  (..con’t) 

4. Incurring Too Much Debt
If you’re spending all your money paying interest on credit cards and installment debt, you won’t have enough left for savings. When you buy on credit and don’t pay the balance off at the end of the month, you end up paying much more for your purchases. A $1,200.00 flat-screen TV can end up costing you $2500, but you’ll never know it because the true cost is hidden in your credit card payments. Pay cash and stay away from credit card debt if you want to accumulate wealth.

5. Not Saving Enough for Retirement or Starting Too Late
When you’re in your 20s and 30s, it’s easy to think you have all the time in the world to accumulate wealth and save for retirement. The truth is, you’ll have to save a lot less if you start now and give your earnings time to compound. If you’re over 40 and you’re behind on your retirement savings, you’ll have to save much larger sums to ever catch up to where you should be. Start saving early, and save at least 10 to 15% of your income, and you’ll be well on your way to accumulating wealth.

6. Giving Control of Your Money to Someone Else
If you’re not involved in your day-to-day family finances, you’re putting yourself at risk.
If you’re married and you let your spouse handle all the financial matters, you’re at risk if your spouse dies or becomes seriously ill or if you divorce. Know the details of your family’s finances, investments, debts, retirement savings, etc. Don’t turn your investments and financial affairs over to a broker or financial consultant without keeping abreast of what is being done with your money and being involved in investment decisions. Never give total control of your money to someone else.

Avoid these money mistakes and increase your chances of successfully accumulating wealth.

Many people will never reach their dreams of having enough money for building wealth, being financially secure, and being able to retire in comfort. The reason is most often a combination of these biggest roadblocks to wealth building.

1. Having a Long Term Mortgage
Most people think nothing of paying for their home mortgage over 30 years, even though the average homeowner ends up paying two-and-a-half times the purchase price of the home by stretching the payments for 30 years. Having a 15-year mortgage instead of a 30-year mortgage can save you large sums of money and help you build wealth. See the below for illustration of how you may be able to save over $100,000 over the life of your mortgage.

30-year $150,000 Mortgage versus 15-year $150,000 Mortgage
$150,000 mortgage at 7% for 30 years = $997 monthly payment
Total interest you pay over 30 years - $359,263
Total amount paid - $509,263 (interest plus principal)
$150,000 mortgage at 7% for 15 years = $1,348 monthly payment
Total interest you pay over 15 years = $242,683
Total amount paid = $392,683 (interest plus principal)
Interest savings on a 15-year versus 30-year mortgage = $116,580
So, where do you find the money to build wealth? Try looking at your mortgage.

2. Not Controlling Spending Leaks
One of the biggest reasons why so many people are in so much debt is because they leaked their money away in small, unnoticeable amounts. Like drops of water dribbling through the hole in the dike, the loss is barely noticeable, but over time the hole in the dike gets bigger and bigger. By the time the water is gushing through, the damage is done. The same is true with spending leaks. It’s a lot easier to plug a small hole than to ignore the drips and look over your shoulder later and see a huge tidal wave of water coming your way in the form of unmanageable debt. If you’re ever going to accumulate wealth, you must control spending leaks.

3. Not Setting Financial Goals
If you don’t know where you’re headed and how you plan to get there, you’ll probably never arrive. To accumulate wealth, you need a plan. To be motivated to save money, you need something specific to save for. To succeed in accumulating wealth, write your goals down and visualize them, whether they’re a comfortable retirement, a mortgage-free home, or an unforgettable vacation.