Continued from Part
PLANNING YOUR FINANCIAL FUTURE
BUDGET FIRST
The first thing you should do is work out your budget. That means looking at the reality of your situation here and now.
There are a number of free online tools and sample worksheets you can use, including at the America’s Debt Diet website. There are also templates in the Microsoft suite as well.
Then get out your most recent pay stub, and all your rent/mortgage, utility bills, and start filling in the blanks. Look at the receipts for all the things you’ve bought in the previous week. Work out in round figures how much you spend on items like gas, electric, cell phone, regular phone, food, clothes, and entertainment.
EASING YOUR CREDIT CRUNCH
Then look at your credit card statements, and the minimums you are paying each month. Is there anything left at the end of your calculations?
If yes, great.
If no, not so great. But take heart.
Now look again. Is there anything you can cut back on, any ‘luxuries’ you could do without, or do with less of? How much would you save each month.
Look at your credit card statements, at the balances, but also at the APRs, the annual percentage rates for the money you are basically borrowing for that new sweater or great pair of jeans you ‘just had to have’.
PAYING DOWN DEBT
If you took the money you saved from the luxuries, how soon could you pay down that debt? If there is any left over, pay down the ones with the highest APR first, then the second, then the third, and so on. You will improve your credit score very rapidly too if you don’t always pay at the last minute, but rather pay as soon as the bill comes.
In a lot of cases you can even pay quickly and easily online, free of charge.
SPREADING OUT YOUR BILLS
Once you have filled in your budget, make a calendar for yourself of when all the bills are due. It is easy to lose track of one and then end up with big problems on your hands.
Look at whether your pay cycle is weekly, bi-weekly, or monthly. Then you can space out the payments over X number of checks you are getting.
Continued in: A Budget: Your Ultimate Financial Management Tool, Part III.
