Most people in debt have a cash flow problem-not enough income to get to the next pay cycle without using debt/credit. So, when we have "special" income like a tax refund, gift, bonus, commission check, severance, whatever, the best thing to do for CASH FLOW purposes and for EMERGENCY FUND savings is to simply prepay mortgage, auto, or loan bills. If you can get even one month ahead, it will help your cash flow situation much more than paying off a credit card account and pocketing the monthly min payment, like the snowball method for example. Imagine not having a house and/or car payment on a month where you can't make ends meet.
There's many ways to do this painlessly including:
This Christmas and your birthday, ask for all cash gifts and prepay a loan payment.
Stop buying Starbucks and fast food and save up one extra loan payment and send it in-your next due date will be advanced one month into the future.
Take your student or auto loan payment amount, divide by 12 and add that amount to every payment. Works with utility bills too. In a year, you will be a month ahead on your loan/account.
Matter of fact, if you can pay your annual bills in just 11 months, it will change your life. It's cheap too, a $100 loan payment is just $8.33 more per month more. A little more than one drive-through combo meal.
Being a month or two ahead on your bills can help you get through unemployment, reduced hours, unexpected repaired, etc just like an emergency fund.
This is not an end/all be all solution, but it can be a very helpful, low cost component of your overall financial health. In those tough months like December, you'll have the option of not making a payment and that will slow down/minimize your dependency on credit.
Submitted June 15, 2017 at 08:51AM by Troll_Supreme http://ift.tt/2sw0HId
