How to Save Money By ...
Paying Down Debt

When we talk about how to save money, we have to look at the general attitude towards money and credit. Many people have a great deal too much debt, but there is good debt and bad debt. What is the difference? Good debt will bring you something of value in the long run. A home or other real estate loan is considered good debt because it is a valuable asset once it is paid off.

A bad debt is usually something like debt on a credit card. It is bad because it has a much higher interest rate than a mortgage, and because you won't have anything of use once it is paid. Furniture wears out and so do cars.

How to save money: If you are using your credit card to buy food, do something about it pronto. If you don't, then you are paying a great deal more for your food than you should be.

It will save you money to pay off whichever debt is costing you the most interest, first. This will probably be a credit card debt. If the interest is 15% interest or more, you'd have to make 20% interest on any other investment to make it a better deal. The only exception is your 401(k) plan - if your employer offers to match your investment on a dollar for dollar basis up to a certain level, you'll be making 100% profit. But only invest in it up to that level. After you reach it, go back to using the money to pay off that credit card debt.

One really dangerous way to pay off credit card debt is to use a home equity loan. Why? Because if you fail to make the payments, you can lose your home. What's more, if your home is sold off to pay the debt, you may not get enough out of it to pay the mortgage, so you'll still owe a lot of money and have nowhere to live. This is a horrible scenario best avoided.

Credit card debt is unsecured, meaning that if you cannot pay it, you can't lose your home or any other assets. That's why the interest rates are so high on credit cards, of course.

How to save money: It's not a good idea to withdraw money from your 401(k) to pay off your credit card debt either. That money is considered a loan and when you repay it, you'll be doing so with money that has been taxed. That means when you take it out at your retirement, it will be taxed yet again.

For Canadians, taking money out of your RRSP to pay off debt has the same implications.

It's bad enough paying tax on your money once without doing it twice!

    More ideas on how to save money

    How to Save Money on Income Tax

The Credit SolutionJohn Cummuta and Tony Manganiello will arm you with all the tactics and strategies you need to build up your credit score in a positive direction. You’re going to make only so much money in your lifetime, and The Credit Solution will show you what you can learn and do about consumer credit so you keep most of that money!

Is this really the best way to manage your spending?

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Our grandparents knew how to stretch a dollar. In those days, a chicken would last an entire week and would feed an entire family of four. By learning to be a creative money saver, you'll discover what they've always known: You don't have to spend a lot to be happy.
~ John Cummuta

The Credit Solution by John Cummuta and Tony Manganiello

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To achieve financial freedom, ideas such as: listening to good advice, learning how to make a budget, understanding credit repair possibilities, avoiding the scams, and generally becoming more knowledgeable of the credit card business, can all play a role in eliminating credit card and other debt. There is A smarter way to manage your money.

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