How minor planning can keep you out of major debt?
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Debt is a fact of life for many people. Major life events continue to rise in cost. With a bit of planning, you can avoid falling deep into debt and the stress that comes with it.
Here are some common significant expenses people may face in their lifetime and how you can plan for them.
A college education can be invaluable as you enter the workforce. College graduates earn more over their careers than those who opt not to attend. Attending college becomes a more difficult decision to justify as the cost of tuition continues to rise. Try to begin saving early on in your child’s life. Opening a 529 college savings plan allows your contributions to grow tax-free if the funds are used toward an eligible education expense. Some colleges offer pre-paid tuition plans that will enable you to buy a year of tuition to be used later. You can also research savings accounts with tax benefits to start setting money aside for your child’s education.
Buying a car
First, determine what type of vehicle you want to buy—new or used, brand, and size. Set up your bank account to transfer a set amount to savings every time you get paid. If you can put more money toward the vehicle upfront, it will reduce your monthly payment. You will also need to factor in auto insurance and maintenance. Shop around to find the lowest interest rate and fees if you are getting a loan.
Purchasing a home
Purchasing a home will likely be the largest investment you make in your life. You should feel confident it is the right decision. If you can, save 20% of the price you want to pay for a down payment. Saving for a house can take years but setting a budget and sticking to it can be helpful. Cut out extra expenses where you can and divert that money to savings. If you get a bonus at work, deposit it directly into savings. When you are buying a home, you can also apply a gift from a family member toward the purchase if that is an option. Once you have established equity in your home, you can explore using home equity loans Utah for major expenses.
The sooner you can start saving for retirement in your career, the more comfortable you will be when the time comes. Envision what type of life you want to lead in retirement, such as a second career, volunteer work, travel, etc. You can use a lot of tools to save money, including an employer 401(k), an individual retirement account, annuities, and more. Talk with a trusted financial advisor to guide you. There are a lot of unknowns in the future, so it is better to be overprepared.
Life is bound to throw some surprises at you. If you can plan for the expected, it will help you navigate the unforeseen expenses a little easier. Planning and saving do require a little discipline but will be very beneficial in the long run.