The common misconception is credit cards are bad. They cause you to go into debt. They make your life miserable. They cause you financial ruin, and you shouldn’t have one if you can avoid it. The truth is no credit card is bad or dangerous. The person using the credit card is the cause of debt and financial ruin. If you cannot use your credit card responsibly, you run the risk of going into debt. Many consumers with ample debt are fearful of how they will get out of debt, afford to live, and how they will ever catch a break from their financial woes. They are quick to tell others that credit cards are bad, but they’re not bad. Credit cards are quite beneficial, and they are valuable to those who use them correctly.
When you rent a car or check into a hotel room, you can use a debit card. You don’t always need a credit card. However, that hotel or car rental company is going to put a hold on your funds. Car rental companies hold whatever the cost of the rental is plus a $200 refundable fee. Hotels typically charge the cost of the room and $50 per night. When these funds are held with a debit card, they’re unavailable for use in your bank account. This means you must wait until you check out or return your car, and then you must wait as many as 7 business days for the funds to be released from their hold. Can you afford to forgo using that money? Credit cards eliminate this problem.
With a credit card, you have more options. Many places are happy to accept debit cards, but others aren’t. You might not be able to use a specific car rental company without a valid credit card as many don’t accept debit cards as a form of payment. Additionally, you cannot rent upscale, fun, or luxury cars unless you have a credit card at any rental company.
Credit card holders are offered valuable rewards. Whether it’s cash back or airline miles, using a credit card can help you earn free money, which is very invaluable. You can apply for a card that offers a cash bonus when you spend a certain amount of money in a specific time, and you can pay it off in full and end up with free money. That’s how rewards work. Let’s say you use your card to pay all of your monthly expenses every month. You then use the cash you would have used otherwise to pay off the credit card bill in full each month. If your bills are $5,000 per month and your cash back rate is 1.5% on every dollar spent, you’re earning $900 each year. That’s impressive.
The biggest value in having a credit card comes from your credit score. When you have a card and you pay it off in full each month, you improve your credit history. This makes it easier for you to build your credit score, to receive lower interest rates on mortgages, loans, and other credit cards, and it makes it easier for you to gain employment and cheaper rates on insurance.
Using your credit card should be done wisely and with care. No credit card is beneficial or valuable to a cardholder if they’re not using it correctly. The best way to use your credit card is to keep the balance below 30% of the available credit always. If you have a card with $1,000 on it, you should keep the balance below $300 to appear more favorable. It’s better to simply pay the balance of the card in full each month and keep the card active and used regularly.
Never make late payments, and don’t miss payments. If you have trouble making a payment, discuss it with a creditor to avoid late fees and other issues. Your credit card is not the problem. The person using it irresponsibly is the problem. Cards are invaluable to cardholders when they are used correctly.
If planning a monthly budget feels like a chore, you are not alone. While many people dread creating a budget, it can be a fun way to see exactly where your money is going. Making a budget allows you to worry less about how you will pay everything and focus more on enjoying your money. By finding creative ways to plan a monthly budget, you can relax more and stress less when it comes to your finances.
Use a Budget App
There are tons of budget apps online that will help you to get your finances on track. The most popular apps allow you to enter your monthly income and balance it with your monthly expenses. You can set savings goals, designate cash for certain funds and get alerts to remind you when bills are due. Many of these apps allow you to link to your bank account, and they can alert you when your account is below a certain amount. You can find both mobile and desktop solutions to help you keep on top of your cash.
Go the Old School Route
For people who choose not to use apps, a pen and paper work just fine. You can use a ledger to enter both debits and credits and track where each penny is going. Reconcile your balances at the end of each month to determine whether you have stayed on track for the month. Writing down your budget items in a notebook or in a ledger will also help you to remember the exact figures you are using to figure out your budget. It can also be helpful for the times when you do not have access to the Internet or your smartphone.
Use the Envelope System
The envelope system makes budgeting simple. With this system, you simply withdraw the cash you need for each budget item and store it in a labeled envelope. When the envelope is empty, you can no longer spend on that budget item. This system works surprisingly well and provides a visual reminder of how much money you have available and how much is left. Many people who struggle with credit card debt find that using this system helps them to keep it under control.
Get the Kids Involved
Getting the kids involved in planning the family budget is not only a great way to teach them about finances, but a good way to keep costs down. If they understand the relationship between income and expenses, they will be less inclined to put unreasonable demands on the household budget. The extent to which the kids are involved with depend heavily on their age. Older children can understand concepts like debt, interest rates and monthly payments. Younger children will benefit from lessons about saving for the future. Sites like feedthepig.org teach kids the value of saving and investing wisely. The site contains helpful lessons on household budgeting.
Make it Automatic
One of the suggestions that the Financial Education and Literacy Commission (mymoney.gov) gives for saving and budgeting is to make the process automatic. Set up automatic withdrawals from your checking account into a savings account on each payday. You’ll quickly adjust to the lowered amount and you won’t have to worry about remembering to save. You can do this through an employer sponsored savings plan or on your own.
Some people create separate accounts for monthly expenses and set up automatic payments from each vendor. This makes paying bills simple and helps you to avoid late fees.
If budgeting is a challenge, there are expert professionals that can help with the task. A credit counselor can help you to get your spending under control and show you how to become free of debt. A financial planner can take a look at your income and expense history and make suggestions about how to make the two balance. There are many personal finance websites run by financial experts that can offer tips on how to create a budget and how to keep the cash flow intact.
When it comes to planning the family budget, there are many ways to make sure the money is on track. From using budgeting apps to getting the kids involved, planning a budget can be both reassuring and fun.
Shopping for a new cell phone plan? You can take away most of the stress by doing the necessary research to find the right plan for you. Some tips for finding this information are to visit a local store, like Target, that would give you a wide range of options. Visiting a carrier store can also help you find the right cell phone plan and phone to meet all of your daily needs. These associates are trained with knowledgeable information and are equipped to answer all of your concerns. They can even find ways to help you save money with your purchase or in the long run. Finding the right plan depends on certain information. The needs of a single student could vary vastly different from a family with two parents and five kids. The following plans are based on overall savings.
Sprint – Sprint was one of the first cell phone plan providers that ever existed. They have gone through all of the quirks of maintaining a celll phone company, so they know how to meet a customer’s needs. Their most popular plan is one that has unlimited talk, text and data for up to five lines for $100 a month. This is a great plan for a large family who might worry about staying in touch with each other. If you are already a customer, they might even offer additional deals for upgrading.
T-Mobile – T-Mobile has significantly upgraded their service and plans over the years. Some of the plans are still a little expensive but they meet all of your needs and are still a little less than some other options. For unlimited data, talk and text, you can get a line for $70 a month. This price includes taxes and fees and is available with the auto pay option that automatically charges your credit card or bank account once a month. Other options are available, including the least expensive plan of unlimited talk and text for $25 a month. If you need data, you can add 1GB at a time for $10. They also have a pay as you go plan if you don’t need to use the phone often.
Cricket – Cricket is the budget friendly plan that has gained popularity over the last few years. Their best plan is the Smart plan with 8GB of data and unlimited talk and text for $45 a month and $9.99 up front cost.
The People’s Operator – This is one of the newer cell phone carriers with prices for the budget conscious. Their Unlimited Goodness plan offers unlimited talk and text with 1GB of data for $16.80 a month. Without auto pay, the price is $26 a month. You have to have your own phone with this plan, and they currently have an offer for a free GSM sim when the phone is activated on an unlocked GSM phone. They are also waiving the $3.99 fee and giving you $20 off the price of the plan for six months. They also have a $16 plan that comes with 1000 minutes of talk.
Verizon – Verizon is known to provide great service and plans for their customers. They are a little more expensive than some of the other plans, but you get what you pay for. They have an individual plan for $50 a month with unlimited talk, text and 1GB of data. You can add one more GB of data for about five dollars. There are also data sharing plans that charge $20 for each additional line that is added to the account. They also have rollover data that can be used the next month.
Before you buy, find out how many minutes that you need to talk on the phone, how many messages you anticipate on texting and how much data you intend on using. Sometimes the unlimited talk, text and data plans are attractive, but if you don’t use some of the features, you waste money. Also consider sharing an account or adding a line to save overall and split the costs with someone else. It is also a good idea to find out how the carrier’s service works in your area. Have a good time shopping.
One of the biggest questions seniors ask is whether or not they should spend time focusing on a home equity line of credit, or if they should look into a reverse mortgage. Both offer their own long lists of pros and cons, but there are many differences between the two. One is for those who can’t afford to make the payments on a home equity line of credit or just don’t have the credit to apply for a loan. The other is for those who can afford to make payments and might want to leave their kids their home when they are gone. There are some differences in each, and not everyone will agree that one or the other is right for them. What they can agree upon, however, is that one or the other works for them. Get to know the difference, and then make the decision to apply for one or the other. Education is knowledge, and knowledge is a powerful financial tool.
This mortgage is one given to seniors who own their home. This type of mortgage allows homeowners to take a loan for the value of their home and use it as they please. There are no monthly payments. There are no debts owed as long as the homeowner is alive. This is a wonderful solution for homeowners who can’t afford a traditional loan or line of credit using their home as collateral. It’s not for everyone, but it’s one that doesn’t affect anyone’s credit. There are not credit checks associated with a loan of this nature, and that makes it easy for seniors with a challenged credit history or fixed income to apply for a loan.
There is no repayment period on a reverse mortgage unless you die. When you are no longer alive, the repayment program kicks into effect. Someone in your family can repay the entire amount of the loan in full to continue possession of the home, or they can sell it and repay the loan. It’s up to your family.
Line of Credit
A line of credit is similar to a loan. It’s taken through a bank. You apply for a line of credit, which is the value of your home. If you have no equity in your home, you cannot apply for a line of credit such as this one. For example, if your home is worth $300,000 and you only owe $200,000 on the mortgage you might be able to take out a line of credit on the equity you have in the home, which is around $100,000. This line of credit is used at your discretion. It works a little like a credit card in that you pay monthly payments on it to repay it to the bank, but you can draw on those funds anytime you’d like for a specific number of years.
You must have good credit, you must have the income to justify this type of loan, and you must be willing to repay the loan each month with at least a minimum payment. It’s not a loan just anyone can get, which is a bit of a downfall for many consumers. This loan works well if you have the credit, but it’s not the one that works for everyone.
Refinancing is another plan that might work for you, but it does require good credit and the ability to repay a loan. This allows you to refinance your current mortgage at a lower rate and even for more than you owe on your home. You can take out a much larger mortgage for another 30 years, and you can save on your monthly payments. It’s a great option for those who can afford to do this.
Deciding Between the Three
Choosing a loan is not always the simplest decision a homeowner will make. If you have good credit but it’s not excellent, you might worry you can’t get a good enough rate to make the payments as low as you might prefer. You might not want to make any payments at all. Your job is to consider how each loan affects your ability to survive, and how it will affect those who are left after you are gone. Once those considerations are made, it becomes easier for you to make a final decision on which loan is better for you.
The financial decision that’s right for you lies in your financials and your personal preference. Don’t let the decision come lightly. Take your time and choose well, because the outcome of this decision is the one that will work the best for you.
Purchasing a car is hardly a luxury for millions of drivers. They need a car for work and various day-to-day business endeavors. Sometimes, a purchase is made on a new or used car with less-than-perfect loan terms. Maybe the loan terms were not all that bad, but the rates are still a bit high.
Lenders do offer refinancing options for those who may not be thrilled about their current auto loan rates. Jumping into refinancing — like jumping into any other type of loan — is not suggested. Careful thought needs to be weighed prior to making a decision. Thinking things through should lead to acquiring the best loan deal or turning one down that is not so great.
Easily the most common reason, a logical reason, to refinance a car is to acquire a better interest rate. There is no reason to direct money that could go into a savings account to a lender who is charging more than what can be acquired elsewhere. Even if the difference between the interest rates is small, the small amount is better in the pocket of the owner.
Avoiding Financial Difficulty
Certain borrowers may opt not to refinance a car loan due to time constraints. They might not want to disrupt their schedule and fill out an application. Anyone who is dealing wit financial trouble really should make time to at least consider refinancing an auto loan. Putting a small amount of money into savings is not something that should be dismissed, but doing so may be put off for a time without much damage. Those struggling with debt or dealing with financial troubles might not have the margins available to them to deal with paying extra on a car loan.
Changing Up the Loan Terms
In addition to acquiring a new interest rate, the new loan could be used as an opportunity to change the terms. Maybe the monthly payment of $300 for 55 more months is a little difficult to deal with. Refinancing and paying $250 for 80 months could be much more preferable.
Explore Solid Refinancing Deals
Many different companies present opportunities to refinance an auto loan. Avoid looking solely at the advertising pitches made by these lenders. Perform the necessary research into the lender first. Doing so ensures the lender is a trustworthy one. Working with the best lender is one way to make sure the best loan terms are acquired without any hidden surprises.
Understanding how much house you can realistically afford is a difficult process. With so many factors to consider, there are numerous ways you can mistake how much you can afford and end up in financial trouble. Before you begin the home-buying process, it’s imperative you sit down and really come up with a comprehensive list of what you can afford, how you can afford it, and where your money is going. You’ll consider your income, your expenses, and your lifestyle. It’s easy to assume you can afford so much house when you aren’t considering things like groceries and gas to get to and from work. This advice is designed to help you understand how much home you can afford so you go into the buying process confident in your finances.
One of the most important factors in your house budget is your down payment. It’s traditional to make a down payment of at least 20% of the asking price of your home. For example, if you’re looking for houses that cost $500,000, you’ll need to put $100,000 down to secure a mortgage. Most traditional lenders refuse to finance homes for more than 80% of the value. This means you’re not going to buy a home without a down payment.
There are down payment assistance and homebuyer assistance programs for buyers who cannot afford a down payment, and each one affects your budget. When you choose a mortgage such as this, you pay private mortgage insurance. This is an additional fee each month attached to your mortgage, and it can be several hundred dollars each month depending on the amount of your loan. Knowing if you can make a down payment or not helps you figure out how much home you can afford.
Income and Credit
Your credit score highly affects how much home you can afford. If your score is excellent, you have good income, and no debt, you can get a great interest rate. If your credit is blemished and your debt is a bit high, you might not qualify for a low rate. This means you’ll need to buy a less expensive house to make up for the higher interest rate. For example, if you are someone whose credit score is around 675, you might not qualify for a rate of less than 4.625% based on current interest rates. On a $200,000 mortgage fixed for 30-years, you’ll pay $1,028 per month for your mortgage.
If you have an excellent credit score of 740 or higher, you’ll see rates as low as 3.841% and a payment each month of $926. That’s $100 in savings per month. That’s with a 20% down payment on a $200,000 house. Your income matters, too. You’ll need to determine your take-home pay each month and subtract what you already pay for expenses from that to see what’s left over.
Your debt matters. If you have ample debt, you’ll receive a lower rate and a lower amount when applying for a mortgage. It’s best to keep your debt under 30% of the available balance, or you can pay it all off and live debt-free instead. Your debt-to-income ratio is used to determine how much you can afford to pay for a mortgage payment, and more debt means less house when lenders look at your credit.
You have excellent credit, and you end up buying a $200,000 with a $926 per month payment. If you bring home $6,000 per month after taxes and pay only $1,500 in expenses otherwise, you’re looking at paying a total of $4,500 left over. Your new mortgage payment makes that $2,426. You’re left with more than half your monthly income in your pocket, so you know you can afford that house.
You’re forgetting extras. As a homeowner, you now owe annual property taxes and homeowner’s insurance. You might have a homeowner’s association fee, lawn service, utilities, and more. If your property taxes are $4,000 per year and your insurance is $2,000 per year, you’re paying far more than $926 each month for your mortgage. Many lenders escrow taxes and insurance, which means you’ll pay an additional $500 per month to cover the cost of taxes and insurance. That’s a total of $1,426 each month. Now you have to add other fees such as HOA and utilities to your budget and you’re looking at a lot more each month. Can you really afford that?
Figuring what you can afford to spend on a home is difficult, and it’s highly personal. You must sit down and do the math to figure out how your new home and expenses fit into your current budget. Just because a bank tells you that you can afford a certain amount doesn’t mean you can, which is why you must do this work for yourself to see what you can actually afford.
Keeping cash hidden in a home is not exactly the best financial advice to follow. Deposits should be safely put away in an account with an established and reliable financial institution. Deposits are insured, which protects the principle amounts from suffering any losses. Interests rates do go up and down, but this is to be expected. Even a low amount of interest helps grow a net worth.
There are three very basic accounts in which money can be placed: a savings account, a checking account, and a money market account. The process of putting money into any of these types of accounts is easy. The interest rates, however, are going to vary. The intended purpose of each account is a bit different as well. Knowing the differences between the accounts makes it easier for someone to select the right account for a particular amount of money.
Checking accounts, as the name implies, is for writing checks and making other withdrawals. VISA debit cards are usually connected to checking accounts and not savings accounts. The assumption here is most people use checking accounts for frequent withdrawals and payments. In all honesty, it does not make much sense to place a lot of money into a checking account that is not intended to be used. The interest rates on checking accounts are usually quite low. Depending upon the type of checking account, fees are involved. The convenience of being able to pay quickly comes with its costs.
For bill paying and quick withdrawals, a checking account makes sense. Of course, a standard debit card is connected to a checking and savings account but the checking account should not be used to “park” money for the long term. The financial benefits of doing so are nonexistent.
Savings accounts are designed for people to deposit their money in an account that does not come with administrative fees or other costs. A savings account also pays interest. The amount of interest is going to be more than a checking account, but the amount of the interest is going to be much lower than various other investment vehicles such as bonds, certificates of deposits (CDs), and the like. Ultimately, a savings account is a safe place to put money. How much money someone puts into a savings account is up to the individual.
Money Market Account
Money market accounts are somewhat confusing to people because these accounts act as both checking and savings accounts. Money can be put into a money market account for the long term. The accounts do pay interest. Checks can be written to withdraw funds from the account, but the number of checks may be limited to a set amount per month. Debit cards are frequently issued for money market accounts. What makes them different from checking and savings accounts? The interest on a money market account is not fixed. Instead, the interest rate is based on the landscape of the money markets. The fluctuating interest may lead to a better rate than what a savings account offers, but interest rates may dip and be lower than a savings account’s rate.
Each of the three accounts serves a specific purpose. Distributing funds into the accounts should be based on a careful consideration of needs and purpose.
Pets are considered an important member of a family. Whether it is a cat, a dog, or any other animal, they bring a unique sense of warmth and happiness in a family. Your pet has the magical potential to make you feel comfortable, and at ease after a tiring day. Naturally, animals give unconditional love to their owners, especially when they are given adequate care. It explains why humans can co-exist with wild animals such as lions. Unlike humans, when one cannot always predict what to expect, with animals, you get what you give. As such, it is imperative that your pet gets not only the best food and accommodation but also medical attention. This is achievable when you have the right pet insurance. However, is it worthwhile?
Benefits of buying pet insurance
In the midst of harsh economic climate, no one wants to add yet another expense, and more so, if it has to do with a pet. Seeing that the cost of maintaining a pet is already high enough, pet insurance is viewed as yet another unnecessary expense. There is more than meets the eye. Consider the following surprising benefits of investing in a pet insurance policy.
1. Protection against unexpected financial risks
Irrespective of the type, insurance is designed to shield the holder against unforeseen financial risks and expensive emergencies. In the case of an emergency, pet insurance for cats, dogs or birds gives the pet owner some form of financial freedom. Medical emergency bills come up when you least expect it, and in worse case scenarios, when one does not have money. Unfortunately, many pet owners have been forced to eat into the family’s emergency fund when something like this happens. As long as you make payments regularly and promptly, you will enjoy coverage against expensive predetermined events. Pet insurance costs vary from one provider to another, and also depends on what it covers. Pet owners pay between $10 and $60 per month. The cost of insuring cats is much less compared to that of a dog.
2. Peace of mind
Buying pet insurance gives you the opportunity to choose the best treatment option for your sick or injured pet without limited family finances getting on the way. You will never have to choose between emptying your wallet and the health of your pet. With a pet insurance cover in place, you can make a sober decision on what is best for your lovely companion. The majority of policies reimburse up to 80 percent of the medical costs after deductibles.
3. Curb the effect of the rising veterinary costs
The costs of veterinary are consistently rising. The general inflation can be blamed on increased pet care. However, the availability of more specialized pet care and more advanced clinics are also to blame. The cost of general checkups and operations are growing. The monthly payments you make towards insuring your four-legged friend are nothing compared to the peace of mind brought by the knowledge that you are financially covered as far as the medical bill of your pet is concerned.
4. Pick your veterinarian
Having pet insurance allows you to choose your preferred vet, unlike health insurance policies for humans that force a health care provider deep down your throat. You just have to submit a veterinary bill to your insurer for reimbursement of the qualifying amount.
5. Easy reimbursements
The ease with which insurance companies reimburse veterinary expenses is incredible. The majority of insurers request a vet receipt after which they reimburse part or the entire cost in a few weeks. Pet owners looking to buy insurance should have a clear understanding of the available plans, to know what is covered. A good insurance company should make it easy for pet owners to receive payments in a fast and less challenging manner.
When you value your pet enough, you will not have to think twice about having an insurance plan in place. Of paramount importance is to ensure that the right pet insurance plan is sought and that premiums are paid promptly every month, quarterly, semi- annually or annually depending on what works for you. Although there are several factors to consider when choosing an insurance policy, ensure to learn the necessary facts and the dynamics surrounding veterinary care. Find out how the insurance works, types of policies, the costs involved, and what is covered, among many other crucial details. Just don’t get into something that you know nothing about.
Consumers don’t think much about their credit score until a major purchase is upon them. Buying a car or house requires considerable debt, and a high credit score can make each purchase an affordable venture. Take a close look at how you can fix your credit score when you discover that it’s lower than 600 or 700 points. Your quality of life can depend on this rating.
Access Your Credit Report
According to the Federal Trade Commission, you can access your credit report once a year or when a company declines your business. This credit report is one of the most important documents in your financial life. Download a copy and read it. Highlight any issues that seriously affect your credit score. Late payments, not enough credit and high credit-card balances negatively impact your credit. Your creditors access this document all the time so it’s a smart idea to read it over too. Older items, such as bankruptcies from a decade ago, may be removed from the record so that your reputation looks better than ever.
Amend Any Mistakes
According to Experian, you have a right to file a dispute if the report has false information about you. Identity theft and other fraudulent actions may be on your report without your knowledge. Frequent verification of the report will only minimize these occurrences. When you file a dispute, send copies of your supporting documents so that the credit agencies have proof of your claim. If the situation is false, the reporting agencies can remove the item with the help of the original creditor. Every mistake that remains on a report will only hurt your chances of borrowing money in the future.
Apply For One Credit Card
You may only have a debit card as a form of currency, but it’s important to branch out. Regardless of any bankruptcies in the past, you need to apply for one credit card. It can be secured or unsecured, depending on your current credit score. Use the card responsibly so that your score can reflect those actions. When you don’t use credit at all, your score has no chance of moving higher or lower. Set a budget for the household, and don’t use the card for more than the monthly income. Responsible spending will be rewarded with a stellar score.
Consider a Second Card
A major part of your credit score is based on the balance-to-limit ratio. Essentially, you should have a large gap between a credit-card balance and maximum limit. Improve your score by adding a second credit card to your wallet. You might charge small items, such as groceries, on this card and pay it off. Over time, the balance-to-limit ratio on both of your credit cards will improve the overall score. Simply be careful about spending habits so that debt isn’t a side effect of the credit-repair process.
Be Aware of “Good” Debt
When consumers deal with a low credit score, they may be wary about taking on any debt. However, there are debts that are considered “good” by the credit reporting agencies. Mortgages, student loans and other associated costs are good debts because you’re actively improving your investments or mind. Examples of bad debts include excessive credit-card balances and personal loans. Keep your budget in mind as you take on good debt while trying to pay off the bad debt in record time.
Pay Bills On Time
A simple way to repair your credit score is attention to monthly bills. With every payment of the electrical bill, you’re slightly improving the score. On-time bill payments also highlight your level of responsibility as your history improves too. Everyone has a late bill at some point, but try to keep up with the payments. Set up automatic drafts from your checking account so that you don’t have to think about paying the bills by hand.
Be careful about scams that seem to revolve in and out of popularity through online or phone-call connections. No company or strategy can erase your credit history. You simply need to repair it through careful use of your current resources. In the end, you’ll be able to apply and secure almost any loan for that next, big purchase.
Debt is dangerous, and it affects consumers significantly. Whether it’s student loan debt that costs students tens of thousands of dollars or more following graduation or consumer credit card debt, there is no such thing as good debt. Debt weighs heavily on the financial future of all consumers. It’s used to determine how much a consumer can borrow from a lender, and it affects every decision a consumer makes. Whether someone wants to buy a home and finds they cannot afford one due to high interest rates because of their credit score or they can’t qualify because they have too much debt, debt is a problem for most Americans. Learning to manage debt is imperative, which is why learning to stay out of debt is the most important thing consumers can do.
Create and Stick to A Budget
The easiest way to stay debt free is to create a budget and stick to it. No matter what, be sure your budget is always on track. Track your income, expenses, payments, and your finances each month. Update the budget regularly when it’s time to make some changes, and find ways to save where you can. Sticking to the budget involves allotting for gas and groceries, and even entertainment so you never go over the budget.
Leave your credit card at home. Use cash when you go out. The best way to stick to the budget and stay out of debt is to use cash. If you take cash into the supermarket to allot for all the items on your list and leave your cards and checkbook at home, you’re less inclined to spend more than you budgeted for. You won’t have the cash to pay for additional purchases, so you won’t put those items in your cart and spend more than you budgeted.
Pay Off Credit Card Balances in Full Each Month
There’s nothing wrong with using your credit card. It’s a great way to keep your credit score high, and it’s a great way to earn cash back or miles or other rewards your card company offers. As long as you’re able to pay the balance in full each month, there is no reason you cannot use your card as often as possible.
Pay Yourself First
Staying out of debt is easier when you have a savings account. Rather than saving what’s left after you spend, save first. Make your savings account a monthly expense, and pay that bill first. You will be grateful you’ve learned to do this when the time comes to get your finances on track.
Don’t Buy What You Can’t Afford
It’s a simple solution to keep consumers out of debt, yet it’s one many people forget about. If you cannot afford to pay cash for something right then and there without sacrificing another expense or bill, you cannot afford it. By not purchasing items you don’t have the cash to purchase, you keep yourself out of debt. It’s a nice feeling to own things that are nice and luxurious and on your wish list, but it’s nicer to live everyday with financial security.
Check Your Finances Daily
Don’t let a day go by without checking your bank account, your finances, and what’s clearing in your accounts. This allows you to see where you’re going over-budget or where you’re making mistakes. Sometimes it’s easy to use your debit card on a coffee here, gas there, dinner one night, and lunch the next day without realizing how much you’re digging into the budget. Check daily to keep yourself on track.
If you want to stay out of debt, keep only one credit card. You don’t need five or six cards since you’re not using them. This can be just as true for this young ones who start collecting all this student credit cards as soon as they start school. Choose the one that makes the most sense for your finances, and use that card only. You can use it as often as you like so long as you pay it off in full each month. Keep this card alone in your wallet, and it will help you stay on track as far as your finances are concerned.
Debt is a major problem for Americans. The average household carries approximately $16,000 in just credit card debt. This doesn’t count cars, loans, or mortgage payments. It’s time to get your finances in order and get out of debt while staying debt free.