Part of our Healthy Finance Series:

Practical Budgeting Strategies

Practical budgeting can help you pay off your debts.

Many people want to pay off their debts quickly and efficiently and yet most folks end up making payments on debt for their entire lives.

Well, there is a reason why this happens. The debt systems that are in place are designed to make lenders money and to make money lenders need consumers who are willing to pay off their debt with added interest.

So, consumers are at a disadvantage. Luckily, there are some practical budgeting techniques that can help you keep things on track.

1. It is important that you have a budget. This can be very complex or very simple and basically compares earning against anticipated expenses. If you can allot money for various items, such as groceries or gas, you can control how much you are spending on purchases people don't often measure. By doing this, you can avoid spending money when it is not needed and you will end up with cash in your pocket. Plus, you will develop good spending habits.

2. Balance transfers can be a good thing. Transferring high-interest debt on to low-interest credit cards or lines of credit can lower your monthly payments and save you money, leaving you extra money to pay against your debt. There are some pitfalls to be aware of though...

Once their credit cards are empty, many people will continue to charge on the new card and increase their debt load even more.

So, only transfer your balance if you can control your spending on the new card; you should avoid increasing your debt load.

3. Check your credit report regularly. You are entitled to one free copy each year from each credit bureau and this can help you keep your credit report free of any errors or inaccuracies.

4. Another good habit to start is talking to your creditors. As convenient as avoidance sounds, it's not a good idea. They can help you negotiate a lower interest rate or extend the loan so that you can pay them back.

5. If you use store cards, pay them off each month. Often the discount associated with the cards is less than the interest you'll pay if you maintain a balance.

6. Consider creating an emergency fund for you and your family. That way all of your money won't be tied up in bill payments and debt and if something unexpected happens, you won't have to charge it to credit. You can start with as little as $10 a month.

7. Pay with cash as often as possible. It is more tangible than credit or debit cards and you will be aware of how much you are spending. The envelope budgeting system is recommended.

8. Avoid making late payments as often as possible. Late payments can affect your credit rating and you can also be charged by your creditors with extra interest or a flat fee.

9. Determine how much extra money you can afford to contribute to your debt and then use that extra money with each month's payment. Doing this will save you thousands of dollars in interest. Never make the minimum payments.

If you follow these simple concepts, your finances will be organized in no time.





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