The Half-n-Half Way to Improve Your Finances

With each new article, I hope I’m bringing you some new ideas and new ways of thinking. And hopefully you’ve begun to use some of the strategies that I’ve been sharing with you to improve your credit situation and get control of your finances.

In future articles, we’ll be talking about earning more income, spending more wisely, building an investment portfolio, and buying a home, and how to best settle debts. That seems like a lot of conflicting ideas. I mean, how do you pay down your debts while at the same time you build your savings? And if you do find ways to generate extra income, what do you do with it? And how do you best use the extra money you save by cutting down on your expenses?

Don’t Be Confused

The simple answer to this conflict of ideas is to use a “Half-n-Half” formula. As your income grows and your spending goes down, you’ll start finding yourself with “extra” money – a great problem to have! What I suggest is that you use a half-n-half formula to help reach your financial goals in the shortest time possible. What that means is that any savings you achieve from cutting your expenses is divided up half-n-half between paying off debt and increasing your savings. If you go on an income blitz (see future article on this topic) and generate an extra $2,000 in income, take half of that and add it to your savings account. The other half would go towards paying off those debts that will most help you raise your credit score and reduce your monthly outlays (A future article will show you this too).

Keep in Balance

This Half-n-Half formula will keep you in balance. It may be tempting to use your “extra” income and spending reductions in a more focused manner than this. You may be so frustrated with your debt, for example, that you focus every last dime you have towards paying down your bills, but this approach can lead to even bigger problems.

You see, life has a way of throwing obstacles in our path at the least opportune times. If you focus solely on paying off your debts, without setting up your savings and reserve accounts, I can promise you that some emergency will come up that will require immediate cash, and if you don’t have it, you’ll find yourself farther in debt and borrowing from your regular bills funds to pay the emergency – creating late payments and continued credit problems.

Take it slow, take it safe, be patient. Put EQUAL emphasis on paying off debt AND building your savings. It really is the fastest way to get where you want to be!

Related Articles:

• Your Financial Bucket List
• Why Standard US Savings Rate Calculations are Completely Wrong
• Need Cash? Try an “Income Blitz”
• Is This Necessary? Evaluating Your Everyday “Latte” Purchases to Save Money
• What Type of Mortgage Should I Get?
• The Cost of Whistles - Living Successfully
• Maybe You Just Need To Make More Money?
• Getting A Raise, Part III
• Getting a Raise, Part II
• Getting a Raise, Part I