If you are facing debt and money issues it only makes sense to be informed on ways to manage your money. Most Americans carry more debt than they should. Why? The old comfort of carrying plastic with no regards of living within your needs and "buy now & pay later" attitude. Too often you will hear many explain the need to purchase an item. The need to spend money often times balloons into uncontrollable payments that far exceeds one's income.
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Money
- Money (Photo credit: 401K)
There is hope at the end of the tunnel when you make the decision to look at your spending habits, manage your existing debt and control your future. Listed are tips to move forward when it comes to your money and reducing debt.
1. Limit your debt
- Just as you've read that you should not charge more than 25-30% of your limit when it comes to credit cards the same balance holds true when it comes to your household monthly debt.
- Monthly debt payments should not be more than 20% of take home income.
- For those who are seriously in debt you want to create an aggressive plan toward debt repayment. Here's a suggestion: 10% charity, 10% discretionary income, 15% savings/retirement, 65%debt.
2. Reduce credit cards
- Don't charge more than you can pay off each month.
- Only carry one emergency credit card.
- Don't sign up for store credit cards to save an additional 10% on your purchase.
3. Cash is King
- Pay with cash when possible. Sometimes even when you use a debit card you don't keep track of purchases.
- Reconsider and avoid impulse purchases. When doing so you should ask yourself, "Would I buy this item if it wasn't on sale?"
4. Start Budgeting
- Before you spend your paycheck it's important to hold each dollar accountable.
- Create a budget worksheet that notes your income and every expense including discretionary money.
Managing money is a big task, however, it's possible to control. When contemplating your household finances don't become overwhelmed. Remember that your debt didn't accumulate in one day and it won't be eliminated overnight. Debt reduction is accomplished ONE DOLLAR AT A TIME.
Bahiyah Shabazz, MBA is one of the nation's leading financial experts on the art of maximizing growth, entrepreneur, personal wealth expert and author of "Finances are linked to emotions: live within your means". Bahiyah Shabazz is also a motivational speaker, columnist and host of Fabulous & Money Savvy Live. Visit Mrs. Shabazz at www.BahiyahShabazz.com
