Research tells us that issues about money management are the number one cause for marital conflict. It is an increasingly expanding problem in our society.
Did you know:
- Credit is one of the easiest commodities to obtain in our society.
- Sixty-six percent of adults have at least two credit cards.
- The average charge is about $200 a month on each card.
- In the U.S. today the average family credit card balance is about $7,000. Some experts put it at a higher number.
We are a debt full society. One of the major concerns for economists is the level of saving in our country is almost non-existent. We spend more than we make. We are encouraged to this level of spending by the easy credit that is available to most of us.
As we approach the holidays, now is a good time to look at your financial status and make steps to get your financial house in order. If you are not paying off your credit card debt each month, you have a financial problem. More important, you are wasting money that could be better spent on yourself or your family. For instance, if you regularly carry a credit card balance of $3,500, ½ of the national average, at 18 percent interest (less than the 23 percent - 28 percent most cards demand), it is costing you $630 a year that you could have for other needs.
The first step to financial well-being is to take time, now, to plan for the holiday spending spree. If you are one of those who has a balance carried every month, now is the time to resolve to buy only what you have cash for. The hard work of getting out of debt can be started now by not getting in any deeper. In January you can begin the next step to becoming more solvent.
First, look at what money you have available to spend this holiday season. This may require sitting down with your partner and making a budget. In the workplace, office gifts may become a burden and cause more work stress. Perhaps your workplace could agree to a small limit on the gifts, perhaps drawing names so only one gift is exchanged. A great way to stay within the budget is to consider “re-gifting.” This is giving a gift from last year that just didn’t fit you, but someone would really love to receive.
Within the family, it is important to keep in mind that it is not necessary, nor is it healthy, for the children to get everything they want. Professionals have made a good case for not overindulging your children, and for putting a lid on your holiday spending. A good resource for this may be found at www.overindulgence.info. Check out the “In the News” section.
Now is the time to begin planning for next year. One way to have the cash for gifts is to open an account at your bank or credit union where you regularly deposit an amount that will be withdrawn when the holidays come around again. Even better is to have an automatic withdrawal from your pay check directly deposited into your account each pay day. Even $10 a month will give you $120 next year. If you are paid bi-weekly, $10 a pay period will be $260. The good thing about this is YOU WILL NEVER MISS IT.
Want To Get Out Of Debt? Here Are A Few Simple Suggestions That Will Help.
1. Resolve to spend less than you make.
Realize that if you can’t pay for it today then you can’t afford it.
2. Distinguish between Bad Debt and OK debt.
OK debt is an interest rate les than 10 percent, preferably with some tax or growth advantage. Home mortgages, student loans, for example. Automobile loans are on the borderline, often not satisfying the low rate, and they almost never appreciate in value. Bad debt is everything else, from your platinum credit card to the 250 percent loan from Friendly Dave’s Payday Loans.
3. Lower credit card interest rate.
Pick one credit card with the lowest rate, cut up your other cards, and resolve to use the one card for emergencies only.
4. Get all the latest bills from all the Bad Debt accounts.
Pull all these together on the kitchen table. Find the minimum monthly payment for each account and then add these to get your overall minimum payment. Pledge to pay the minimum PLUS an additional amount each month. (Consider at least $50 above the minimum on the highest interest rate loan.)
5. Pick the highest interest rate account and attack.
Apply the additional amount to the greatest rate account; repeat until the last Bad Debt account is paid in full.
6. Ask for a lower rate.
Take any account charging more than 14 percent interest. Dial the toll free number on the bill and ask to have your rate lowered to 11 percent. You may want to tell them you have received offers for much-lower-rate cards, but you prefer to stay with them.
7. Be careful.
Be aggressive in paying down Bad Debt, but don’t get so ambitious that you risk missing minimum payments on your mortgage, automobile, or any other secured credit account.
These are some ideas taken from some of the materials available to help you become more savvy and solvent in your spending from the Motley Fool. Additional helps, along with a workbook, are available at www.fool.com in the Get Out of Debt area.