It’s time to move on and start thinking about a more invested year in your life.
Brazil is breaking debt records. Nearly 80% of all Brazilian households are in debt, according to a survey by the National Confederation of Commerce in Goods, Services and Tourism (CNC). Faced with this situation, many people become discouraged and fail to see a light at the end of the tunnel.
But you can’t stand still. You need to move on, get out of debt and start investing. Then yes, life will take a turn. This is exactly what Fabio Louzada, economist, CFP (Certified Financial Planner) and CEO does I bank.
With good advice from Louzada himself, follow 12 tips to get out of debt and start investing right now.
1. Know the characteristics of your debt
“The most expensive credits are the overdraft and the revolving credit card, as they are types of emergency credit. The average interest rate on revolving credit cards is 364% per annum, while overdrafts are 167% per annum. These types of loans can put an end to your financial health. Therefore, understand the commission that you are charged and renegotiate as quickly as possible so as not to jeopardize your income anymore,” says the financial advisor.
2. Look for cheaper credits
“Personal credit itself is cheaper than overdraft. In addition, you can opt for methods such as paychecks or collateralized credit, which have more attractive rates, but stay tuned to never compromise your debt again. Start paying off your debt early, as no investment, no matter how good, will pay more than the interest on an overdraft or revolving credit card.
3. Understand your fixed and variable expenses
“When you separate variable spending, you can identify some unnecessary expenses, which can be reduced over the next month. Therefore, I recommend that you write down your expenses, especially for 3 months, so that you can identify spending patterns. Look at fixed expenses that are really necessary, for example you may have many subscriptions to services that you don’t use,” advises Louzada.
4. Beware of invisible spending
“Uber and iFood, for example, can commit 20%, 30%, 40% of your revenue. Since the shopping is practically daily, you end up not feeling it in your pocket, but in the end it makes a difference ”, she warns.
5. Take care of your credit score
“Don’t let your name get dirty, pay everything on time, and when you don’t get it, pay it back. When the name goes to the credit protection bodies, financial life becomes more difficult. No longer having access to credit and with higher interest rates, as the risks are greater,” says the specialist.
“Anticipating dreams can be very expensive because of the interest. If you save and invest, you will be able to buy the asset for much less than the interest payments, which are currently high, due to the Selic”.
6. Set a goal for your money
“When you save just for the sake of saving, you lose focus and everything becomes a reason to spend when the money stays in the account. Now, if you have a big goal, which could be a trip, a car, a property, you’ll think twice before making unnecessary purchases.”
7. Leave your credit card at home
“The credit card looks like infinite money, because since the money doesn’t leave the account at that moment, it seems that this account will never arrive, but it does. So have you found something cool worth buying? Don’t buy right then, because if it’s important you can come back another day with your credit card to buy. Make it difficult to use your credit card, because it can complicate you a lot,” he advises.
8. Build an emergency reserve
“Focus on building an emergency reserve, which can be 6 to 12 times your monthly spending. An emergency reserve is an investment that you make, that you can use at any time, in case something goes out of plan. If you don’t have a reserve, some unexpected event can make you run to loans and further compromise your budget”.
9. Plan your monthly budget
“Separate how much you will earn in the month and all costs, understand everything that is committed from your earnings and how much is left over for variable expenses and investments. Set deadlines and goals for your goal: stop saying ‘this year I want to invest’ and start saying that this year I will invest R$ 6 thousand, R$ 500 per month’.”
10. Watch out for inflation in your investment
“If the money is in savings, take it immediately and look for investments with a more attractive risk than return. A CDB paying more than 100% of the CDI is paying nearly double the savings. Inflation can wipe out your purchasing power,” she says.
11. Study discount and cashback plans
“Credit cards are not only bad, but they can be excellent allies for earning miles by generating discounts and cashback. Look for discounts in stores, figure out the best time to buy what you want.
12. Look for ways to earn extra income
“For this, the best way is to study, acquire a new profession or learn something that will make you generate more value at work,” concludes Louzada.
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Source: Terra
Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.
