| |
Admitting to money problems and making a commitment to do something about them is surprising liberating. Most people are relieved, although they realize they have many years of belt tightening ahead. Here is a topic list of some ways to recover financially and keep your credit strong:
Create a Budget
Save Regularly
Take a Holiday from your Credit Cards
Manage your Debt
Evaluate your Spending - Past and Present
Recovery and Beyond
(See below for more details on these topics.)
Create a Budget
No business would operate without a strategic plan or a carefully crafted budget. Well neither should you. Create a budget that clearly outlines your necessary expenses (such as housing, food, health care, debt reduction and savings) and your optional expenses (such as entertainment). Is the budget realistic? Is it manageable? Stick to it.
Save Regularly
Speak to your employer about setting up an automatic withdrawal program to help you put some money aside each month. Another easy way to save is to put a jar on your clothes dresser and deposit all of your pocket change in it at the end of the day. You'll be surprised how quickly a few quarters will add up to a few dollars and then a few hundred dollars. Cut some of life's "luxuries" and use the money to pay down debt more quickly or to bolster your new savings account. Cut just $123 each month and it will grow at 10% to $278,040 in just 30 years.
Take a Holiday from your Credit Cards
Credit cards certainly make life easier. They are ideal for emergencies and a great way to monitor your spending. They are also dangerously seductive. Think about how much harder it would be to spring for that extravagant purchase if you had to leave the store, go to the bank and actually withdraw the cash. Why not give it a try? Put all of your credit cards away temporarily and spend a month paying for everything with cash. You will be surprised how much harder it is to hand over your hard-earned cash.
Manage your Debt
Avoid the common mistakes that can hinder your credit management program, like co-signing loans, signing contracts without understanding them toughly, trying to keep up with the Jones, and dollar dribbling.
Evaluate your Spending - Past and Present
Research shows people's self esteem has more to do with their debt problems than any other single factor. In many cases, people overspend to fill an emotional void. They spend when they are happy. They spend when they are sad. They spend when they are mad. Instead of spending your money spend some time thinking about what motivates your spending. You'll be surprised at what you discover. Pay special attention to significant purchases and when you were them. Did you need that new TV you bought or was it compensation for that promotion you missed?
Recovery and Beyond
Ultimately, the liberation that comes from working towards and gaining control of your credit and financial situation, is the best gift you will ever "buy" yourself and your family. |
|
