Take Control Of Your Finances

Generally, if your bills are increasing and your income isn’t, you’re in trouble or heading for it. Check the following list. If two or more of these apply to you, it’s time to take a serious look at your finances.

• My required monthly minimum payments are 20 percent or more of my take-home pay, not including rent or mortgage payments.
• I use cash advances from one credit card to pay off another.
• I pay only the minimum due or less each month.
• I don’t know how much my total debt is.
• I’m getting calls or letters from creditors about overdue payments.
• I often pay bills late.
• I’ve recently been denied credit.
• My income isn’t enough to pay all my current bills.
• I have more than three credit cards and I’m using all of them.
• A purchase was turned down because my credit card was over the limit.
• I have to use credit cards to pay for things I used to pay for with cash.
• I have at least three credit cards and I am still applying for more.

If you feel that your finances are getting away from you, follow the budgeting and planning steps on this site to help you regain financial control. You may need a few months to fine-tune your spending categories. Keep adjusting until you have the plan that works best for you.

Getting spending under control is not easy, so include your family in all plans. They can be a positive support system. Besides, the changes you make will affect them too. They deserve a voice.

Getting Spending Under Control

If your income doesn’t cover your expenses, you must either cut your expenses or increase your income. It’s usually easier to cut spending than to increase income. You don’t need to make drastic changes, but you must make some effective cuts that will allow you to pay your bills. First, cover the bills you must pay (mortgage, utilities, loan payments) and money for necessities (food, clothing, insurance). Then, focus on non-essentials – areas where it will be relatively painless to cut back.

Getting out of debt is tough. It also takes time. Most people need a year or two to escape from debt. But you can do it if you stick with it. Remember, the discipline and techniques you learn by solving your problems will benefit you for the rest of your life. Getting out of debt feels great. Staying out feels even better.

Once your monthly spending is under control, you can think about some ways to make debt a thing of the past. Here’s a list of ideas:

• Each month, try to reduce a different spending category by 5-10 percent.
• Start a savings account for large, infrequent expenses so they won’t upset your budget.
• Charge items only if you can afford to pay for them now – especially large purchases.
• Treat a credit card balance like you’d treat a bank loan for the same amount.
• Avoid the "sale" mentality. When you buy a $100 item on sale for $60, you don’t save $40. You spend $60. It’s only a deal if you need it and can afford it.
• Try to increase your income. Can you improve your salary? Is a second job possible?
• Reward yourself. Working your way out of debt is a long, hard task. It’s also a big accomplishment. Find inexpensive ways to celebrate your progress – spend a day in the park, bake yourself a cake or treat yourself to a new CD or book!

Additional Resources

National Foundation for Credit Counseling’s DebtAdvice.org help consumers understand the use of credit and to locate a trained, certified counselor for credit assistance. Help With My Credit is a resource provided by leading credit card issuers and payments networks to raise awareness and educate consumers struggling to make their credit card payments about assistance available to them, including the work the companies are already doing individually to assist their cardholders.