Personal Finances

While there are several lenders and financial institutions that offer good credit deals, borrowing money should not be your one and only option to rid yourself of your current financial need. With proper management of your personal finances, you can better manage your hard-earned money and save yourself from borrowing money and paying expensive rates that come with these deals.

The Federal Reserve, in late 2014, released alarming figures on credit card debt in the United States. The research revealed that 15% of cardholders in the country had card balances that are over $10,000. Also, almost 14% of an average family income is being used to pay for credit card balances. With such startling figures, it is easy to say consumers are indeed getting deeper and deeper into debt. And if you’re one of those who have found themselves stuck in the vicious cycle of debt, it’s certainly time to start working on them with the following helpful tips.

Keep an eye on your credit. Find out how much you owe and to whom you owe money, and then create a list. On your list, make sure you have the following information: creditor, amount of debt, and the due date. Then, create a plan on how you want to pay the money back. Keeping tabs on your credit is very important especially if you are on a strict budget and needs to pay other bills on a monthly basis.

Pay your bills on time each month. These include utility bills, credit card bills, or even payments for car or home mortgages. If possible, pay the balance on time, or even more than what’s required. And if not at all possible, at least make a minimum payment. Although making a minimum payment will not help you achieve a huge progress on your debt, it will at least prevent your debt from growing.

Change your spending habits. Especially if you’re a shopaholic or an impulsive buyer, this is a bit of a challenge and will require tremendous discipline. Start by identifying the non-essential things you can cut down on. Create a list of things you need to buy before you go shopping, and unless you have extra money to spend on things that are not really essential, fight the urge to buy those that you don’t really need. Cutting expenses will leave you more money that you can use to pay off your debt.

Pay with cash. By paying with cash, instead of swiping your credit card, you will see exactly where each dollar goes. Also, compared to just swiping your card, it is quite harder to purchase a non-essential item with a hard-earned cash. Try this technique and find out how you feel, and how much you’ve saved, over time. Importantly, make sure to keep the receipts of all the purchases you’ve made, as these will help you keep tabs on your spending.

Identify your budget each month. Not including the debt you have to pay each month, identify how much you can spend on essential and non-essential things each month. Make sure to stick to your budget by creating a list of the most important things you need to buy first. And if there’s a little extra, you can either save it to pay off your debt or future expenses, or maybe purchase that pair of shoes or dress you’ve been eyeing on for long.

From friends and relatives to banks and credit unions, to online lenders and peer-to-peer lending, there are several ways of borrowing money these days for a variety of purposes. With such huge options, it has indeed become easier to borrow money, which also means you can easily get stuck in a cycle of debt. The truth though is that, with proper management of your finances, you don’t always have to borrow money. Remember that most of the debt that today’s consumers have incurred are a result of careless financial behaviors and overspending. And with proper debt management you can save yourself from further future financial peril. Manage your personal finances with the above tips, or choose to hire a credit counseling professional to help you with debt consolidation and management.