LendingTree.com conducted a nationwide poll that measured attitudes about consumer loans, credit card debt, credit scores, savings and financial plans. It was alarming that 48% of the respondents were uncomfortable with their household debt. Even more alarming was that 54% admitted they have no financial plan to become debt free. This clearly establishes the need for people to learn how to manage their debts.
The way money works in your household is more about emotion than about math. Financial advice needs to be written for humans, not robots. Life has unexpected events that you can manage and plan for.
You may have heard this a thousand times and you’ve either given up on the idea or you’ve found a way to budget that you can live with. One way to budget is to take a piece of paper and write your total monthly income. Under that write down all of your expenses in categories and guess what amounts they each are. Total this amount. Make sure your income and expenses are totally equal. You want to spend all of a month’s income on paper before the month starts. Spend all of it on paper. Don’t forget that savings is a category. Now you have ordered your money to behave because each dollar has a job to do.
Allow for Mistakes
You are going to make mistakes the first time. Don’t worry about that. You will get better and better at estimating your expenses. With practice your budget will become one of the most powerful tools available to you to keep your finances on track.
Debt is your largest obstacle to financial security. Think about your current beliefs about debt other than your house and car. Debt is not something you just have to live with. Many people live debt free. So can you.
If you are living on borrowed money you can prevent digging a deeper hole for yourself. Mitlon Berle said, “It’s amazing how fast later comes when you buy now! Just stop using any borrowed money, which of course will include your lines of credit. Don’t close your accounts because there are situations that you need a credit card. Renting cars, securing a hotel or paying for a vacation will need some kind of credit. When you use them for that purpose and keep your balance at zero, then you are doing great.
Saving and investing are two of the best things you can do with your money. If you watch the Suze Orman televsion show, you might think that everyone in the country may be better off than you are and that everyone has over $300,000 in savings for retirement. Well, take heart, because there are people who have no savings at all and who find it hard to save. Start with a small amount if you are having difficulties making ends meet. As your income grows and your expenses lower, then you can save more. Make it a habit to do this on a monthly basis.
“The safest way to double your money is to fold it over once and put it in your pocket.”
~ Kin Hubbard
Get rid of items that you no longer need. Not only will you get some added income, but you will have more space to live.
Use automatic deposits into your savings account. Sometimes it is less painful for people to save money when you don’t have to decide to do it every month. You make a decision once and then set it on auto-pilot. In six months to a year, you’ll have a nice amount of money saved.
“Money can’t buy you happiness but it does bring you a more pleasant form of misery.”
~ Spike Milligan