Uncategorized

Budgeting

5 July, 2017



By

Rosemary White

, October 4, 2011 2:48 pm

If the rough economy has taught us anything the last several years, it’s how bad things can really get when you’ve got a mound of debt. I don’t mean a mortgage. I’m talking about credit cards and the use of debit cards. Millions of Americans ran up their personal debt before the 2008 financial meltdown, running up balances on six or seven credit cards. The recession hit like a ton of bricks. So now, credit card debt has fallen to near 10-year lows.

That word comes from Transunion, a company that knows about Americans and debt. As one of the three credit bureaus, the firm released a report recently showing a decrease of 5% a year, putting average debt at just under $4,700 per borrower. And more good news: the number of consumers who are more than 90 days late with their credit card payments has also fallen by .6%, and is now at the lowest it’s been in 17 years. Some credit card companies have written off a percentage of the money owed to them. But, in many cases, consumers have focused specifically on reducing the amount they have to pay each month. Here’s how:

· Belt Tightening. This is always the first thing I suggest when meeting with clients. Whatever you’ve been buying, you need to buy less or be smarter about it

· Track Income and Spending. Before you can get a handle on anything, you’ve got to know what’s coming in and going out. This will give you the baseline on which to start. Track your spending for at least 30 days by keeping a small notebook with you at all times. You’ll be amazed at where all the dough goes

· Shift Pockets. Whatever you save on specific items can be sent to creditors

· Call Your Lenders. Make a list of your credit cards, interest rates and phone numbers. Call each one and ask them to cut your interest rate by 10% (you won’t know until you ask). Tell them you’ve gotten a better offer from another company as an incentive to work with you

· Take a Top Down Approach. Once you’ve paid off the card with the highest interest rate, move on to the next one. You’ll reduce your debt quicker if you focus on the highest-rate cards first

· Build a Cushion. Once you’ve made a dent in your monthly credit card payments, shift a few bucks into savings to build up your emergency fund. This will help you sleep better at night

Remember, it’s a marathon. You probably didn’t get in this hole overnight (although I suppose that is possible) so just keep plugging away and you’ll reach your goal of significantly-reduced debt before you know it. Until next time, here’s to good planning!



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