Emergency funds and debt repayment strategies for financial stability
emergency fund part one tubangan stored with a special purpose to mberjaga guard if there are unexpected things, such as disaster disaster, vehicle repair, medical treatment costs as well as home repairs, but at the same time we have debt and are obliged to return it, which becomes permasalalhan whether we can set aside an emergency fund is on the one hand we have set aside
which is more important to pay off debt or set up an emergency fund
emergency funds provide security for our assets so as not to fall into debt when a critical situation occurs, without emergency funds we have no choice but to use long-term savings to fund the cost of building a house. but if using a credit card to cover emergency expenses can plunge into a circle of interest-bearing debt that does not end, paying off debt is very important to maintain financial freedom, uncontrolled debt can cause stress in the mind and in finnaislal important for us to pay off the forest gdnegna set aside emergency funds
How To Set Up An Emergency Fund
Determining The Ideal Size
determine the amount for an emergency fund so as not to interfere with day-to-day expenses, generally planning an emergency fund of 3 to 1 year monthly expenses, so monthly expenses multiplied by 3 to 12, just in case something happens outside the calculation, including routine expenses plus dependents
Split Accounts
keep emergency money separate from operational accounts, with savings accounts with higher interest rates than ordinary savings such as deposits with minimal risk, many people divide their funds into more conservative instruments such as bonds and money market mutual funds to protect against inflation
Optimization Of Savings
set up automatic transfers from salary accounts to daurat fund accounts to maintain regularity in saving without worrying that money will be used if it feels heavy you need to reduce expenses and focus more on additional income
Strategies to pay off debt quickly
make anggran as realistic as possible by recording secraa details of daily expenses and then recap expenses after the end of the month, utmakan needs rather than desires for example eating we need to eat to maintain stamina and body nutrition remains balanced, we can eat tempet or know that the price is affordable, does not have to be sea fish or eat beef
use avalanche or snowball method
The avalanche method focuses on paying debts with large interest first, then paying debts with small interest
Snowball Method This method by completing payments from hitang with the smallest interest then gradually to the largest interest
Debt restructuring
this method is used when the customer is unable to complete the payment so that the customer is given a smaller interest rate for a longer period of time, this is done to maintain smooth payments that directly affect BI Checking
Debt consolidation or balance Transfer
huntag consolidation is combining several debts for one loan, the amount of this loan is then submitted to financing with smaller interest
Increase Earnings
find a side job or start selling a small business for extra income that speeds up paying off debt
Avoiding debt in the future
divide fixed expenses Vs variables identify fixed expenses such as rent and variables such as entertainment, as much as possible reduce variable expenses
Avoid impulsive purchases take time and rethink before buying something to make sure your needs are met
maintain financial discipline create a realistic budget and stick to it
Signs Of Uncontrolled Debt
we often miss the minimum payment
too much interest high enough to interfere with the payment of principal debt
excessive use of credit cards for daily needs
in certain unexpected conditions such as job loss the emergency fund can be used to cover basic needs while making debt payments but prioritize immediately replenishing the emergency fund after the situation has improved