You On A Budget!
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Just the word, “budget,” can put people in a tailspin. It’s not the most pleasant task, but it’s a necessary evil if you’re going to face up to bad spending habits and turn yourself around so that you’re making wise decisions.
Most people who find themselves in the throes of bad credit don’t know how to put themselves on a budget or save for a rainy day. It’s a matter of discipline and determination – and it’s probably the most important step to take complete control of your money.
The first step to setting up a realistic budget is to keep track of your spending habits – every dime of it — and review your bank statements to know exactly where your money goes.
Your biggest expenses will probably be housing and transportation. Then, you’ll concentrate on credit cards, clothing, utilities, entertainment and food. One way to calculate where you should be spending money is called “The 60% Solution.” The theory determines that 60% of your total net income is spent on necessities (including taxes).
Then, in 10% increments your money should be spent on savings, holidays and emergency situations such as auto repairs. The numbers will depend on variable expenses such as health care or the cost of fuel to drive back and forth to work.
After you see where your money is spent, you can make changes. For example, you may be spending $3.00 every morning on a Starbuck’s cappuccino. After five days you’ll have spent $15.00 – that’s $60.00 per month that could go to paying down your credit cards.
Here are some tips for creating a successful budget:
Be brutal with your numbers. Cut out unnecessary spending everywhere you can.
Keep accurate records. This will help you track your spending.
Be on time when paying your bills. Don’t complicate matters by garnering late fees.
Live within your means. You may have to sell your big house or use public transportation, but living within your means will make you “get real” with your money and yourself.
Think before you spend. Ask yourself if you really need the item or service you’re about to purchase – chances are, you don’t.
One of the best moves you can make to ensure that you never find yourself in a quagmire of debt that you can’t pay is to establish an emergency fund. Experts say that you should put from three to six months of expenses into a savings account or fund that you can access immediately.
About The AuthorTiffany Dow is an accomplished writer who believes that it’s time for America to get realistic about our spending habits. To learn how you can improve your financial situation, including your credit score, please visit: DebtCreditTips.com |
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