There are several aspects to good financial management. Few Americans are really debt-free and some loans, mortgages and student, make a positive impact on future well-being. The latter if it funds a successful college graduation should help the graduate towards a more successful career. The former which allows the borrower to purchase real estate should help the family increase its assets over the medium term and beyond. The logic behind a Certificate of Deposit (CD) is that it will guarantee growth; its similarity to a savings account means that it is virtually risk-free.

At times, financial decisions are based on temperament. Some people cannot face the prospect of being in debt for longer than is absolutely necessary; others, many more as a percentage, seem to prefer spending because they want something immediately rather than waiting until it is affordable. That is one of the main things that has created the huge amount of credit card debt in the USA today. There is a third section of people and they are perhaps the most astute; the ones who properly weigh up the implications of each financial decision to arrive at what is the most beneficial course of action. It takes into account rate of return on investment and the cost of maintain no credit check loans rather than paying it off more quickly.

Invest or Pay Off?

Part of everyone’s monthly pay check goes on daily living expenses but there is nothing wrong is looking at expenditure because there can be savings on such things as utilities and insurance without that involving any sacrifice. However, it is the rest of the income where you have decisions; take on risk-free investment, or paying off your debts at a quicker rate with a proportion of it, as well as allocate a sum for investment in more risky ventures.  You should be able to do some simple calculations on the benefit of both; guaranteed growth against the interest you can save by reducing your debt.  Remember your ‘’risk capital’’ is a separate amount.

People who hate debt may well still lean towards paying off their student loan even though the terms of federal loans are fairly easy to bear. The problem arises of cash flow. You must be careful not to significantly reduce the amount of money you have available at any one time to address an emergency because if you need to resort to a credit card, you will face a high interest charge if you can’t settle the full statement amount when it is due.

A Good Strategy?

Your budget needs constant attention. Ensure that your income reflects what you earn and look for ways to improve it if you can. It will give you more scope to make choices on finance, whatever they may be. You need to decide how much of that income you want to use for guaranteed returns as opposed to more risky ones.

• What ‘’assets’’ do you really need and can their value be better employed elsewhere for better growth?
• Put a timeframe on all your investments so you can calculate where you will stand at different times in the future, reducing debt levels to what they will be at those times.
• Consider the psychological value of paying off small debts quickly so the numerical amount of your creditors is reduced.
• Get rid of any expensive credit card debt, even if you take out a cheaper personal loan to do it.

The Future

The sooner you can start to save in any preferred way for retirement the better. If you allow compound interest to work for you, even small amounts set aside regularly will grow far quicker than you might expect. There is a strong case for a 401(k) where employers contribute to your fund. There is also a strong case for CDs, with older people not advised in taking too much risk.

There is a case for seeking higher yields as well, taking advice where needed. With rates so low, it is rarely worth paying off a mortgage early while you have regular income; use your money to work for you.

There is no scientific way to decide what proportion of your income should go into guaranteed returns as opposed to riskier ventures; the main thing is to get you thinking so you have a better chance of a good financial future.