Take Charge of Your Money
by Ruby Hawk on Jan 25, 2009 with 20 Comments
With these days of high prices its tough to make ends meet and still add to your savings account but with careful budgeting you can do it.
Living without a budget is like driving down the road with a blindfold on. You can’t see the pot holes in the middle of the road so you sail on with a hit or miss attitude. You can make a concious decision to be in control of your money and a budget is absolutely essential. Make a list of all your expenses. Decide on the amount you can put in savings. If it is not more than 10 or 20 dollars, that’s fine. You can add more later. You want to get in the habit of saving something from every pay check.
Now pay all your bills by check and take the money you will need for that period of time from the bank. Put your credit cards away. Don’t send them back just hide them away, or if they are too tempting cut them up. Paying cash puts limits on what you can buy and it will stop impulsive spending. As you begin to pay with cash you will be shocked at how much you spend mindlessly. Paying cash will put the brakes on heedless spending.
Have you checked your credit cards to see just how your payments are being applied? Credit card companies have you right where they want you when you reach the point of not being able to pay your bill each month. The interest you pay makes them richer and you poorer. At a 14.39% average credit card interest rate, very little of your minimum payment goes to pay down the balance. If you owe $5,000 at 14% interest rate with minimum payments of 2.5% of the outstanding balance, it will take you 243 months (20 years) to pay off the balance. Is it worth it? In that time you will pay $4,167 In interest, that is if you don’t add any more purchases to your card.
You need to be aware of interest rates. Ignoring them can get very expensive. The mortgage on your home, a bank loan, savings account. You need to compare and get the best interest rate possible. The difference between 3% ($8,734) and 1% ($2,628) on $25,000 in a savings account over a 10 year period is more than $6,000.
If you go to the ATM rather than to your bank, limit your self to no more than once a week. Allocate your money to the proper places and when it’s gone that’s all until the next week. Frequent trips to the ATM leaks your money away and drains your assets. Discipline yourself and know that you are becoming responsible.
If you are apt to procrastinate, pay your bills the day you receive them. The cost of a late payment is bad enough, but many creditors will see one or two late payments as cause for increasing your interest rates. The increased interest and the late fee can easily send the credit balance over the limit which kicks in the over limit fee. And even one late payment can put a black mark on your credit report for seven years. So just don’t go there.
Bouncing your bank account by ATM withdrawals, debit cards, or writing a bad check is a no win situation. If the bank decides you are a deadbeat customer, they’ll close your accounts and report it to the central clearing house. You will find it very hard to open an account anywhere. If you must, arrange for overdraft protection. You will be charged a transition fee. It’s better not to overdraw to begin with. List every transaction in your check book register, every single one, and never allow yourself to come closer than $100 to the end of your bank account. Go over every item when your bank statement arrives each month.
You are allowed a free credit report each year from Experian, Equifax, and TransUnion. Make a note on your calendar to request one of your free credit reports on the first day of February, June, and October. It is estimated that 4 out of 5 credit reports have errors. Inaccurate information could mean you are paying higher insurance premiums or higher interest on your credit card account, and you are stuck with a low credit score. So check your credit report. Get your free credit report at; AnnualCreditReport.com (all other sites requires you to pay)
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Published in: Personal Finance
rutherfranc | Jan 25, 2009 | Reply
“Put your credit cards away.” – my favorite line
Christine Ramsay | Jan 25, 2009 | Reply
This is really helpful advice. I had problems a few years ago and did what you suggested to get myself sorted. Now I am free of debt, don’t have any credit cards and am so much happier. What’s more I can sleep at night. Thank you.
Christine
OhSugar | Jan 25, 2009 | Reply
Ruby,
Thank you for another great wealth of important information. I enjoy your article and I listen carefully. I am working hard on my finances,so this article is inspiring.
God Bless
nobert soloria bermosa | Jan 25, 2009 | Reply
another helpful post,thanks Ruby and be well always
Jenny Heart | Jan 25, 2009 | Reply
Very good information we all need to heed. Great information!
Glynis Smy | Jan 25, 2009 | Reply
We got rid of credit cards, my 3 adult children sorted out their finances and realised the benefits of saving and not using cards. They have emergency ones that their partners hold, so they cannot be used and vice versa. This is a good article.
Betty Carew | Jan 25, 2009 | Reply
Great article Ruby lots of good advice in here. thanks
Ristifer | Jan 25, 2009 | Reply
Budgeting is something I really should look into more closely. Always a good idea. The ATM part is good advice for someone like me.
Maria Blazz | Jan 25, 2009 | Reply
Ruby, if I were Barack Obama, I wanted you in my team to design an economic strategy
I bet you could do it better than politics!
PR Mace | Jan 25, 2009 | Reply
We have had a budget for years. Since we got married and I put us on one. I always pay myself first. By that I mean I put a certain amount of money in saving with each pay check. We paid off our check cards long ago and only have one for an emergency. It can be done but it takes hard work. Thank you, Ruby for a timely article full of good advice.
Shirley Shuler | Jan 25, 2009 | Reply
This is very good information Ruby, I can put this to good use,
well done!!
James DeVere | Jan 25, 2009 | Reply
Thanks Ruby . j
Inna Tysoe | Jan 25, 2009 | Reply
Thanks for that.
Inna
denus | Jan 25, 2009 | Reply
very well done,
thanks,
denus
Anne Lyken Garner | Jan 26, 2009 | Reply
YOu’re right about the cash thing. If you spend cash, you’re less likely to buy everything you see, just because you can.
Making a list of exactly what you want, even at Christmas time and on birthdays, also takes away from spending too much impulsively.
A very useful article, indeed.
Ruby Hawk | Jan 26, 2009 | Reply
Thanks guys, As always I appreciate your feedback so much. With money as tight as it is now we can’t be to careful about our finances.
Christine, I have found the best way to get your finances in order is exactly as you say; Put your credit cards away and pay cash.
Glynis, your children have learned a valuable lesson for a life time of finanicial success.
Pam, It does take patience and hard work but it makes you a happier person to be in charge of your finances as you stated.
Anne, the very best way to stay within your budget is to keeep a list and don’t buy mindlessly.It will keep us solvent and out of the poor house.(so to speak)
Liane Schmidt | Jan 27, 2009 | Reply
Very good article – thanks!
Blessings.
Sincerely,
-Liane Schmidt.
eddiego65 | Jan 28, 2009 | Reply
Great article. Very helpful advice. Thanks!
Chris Stonecipher | Jan 29, 2009 | Reply
Ruby,
I certainly need this advice right now during my hard times. Thank you,
Chris
Nick Kenney | Feb 7, 2009 | Reply
Excellent advice all around Ruby, thanks for posting!
I can tell you being a truck driver that the trucks are not moving which backs what the media is saying about the economy being so bad…everything in the states is moved by trucks and when we’re not running it’s time to say prayers…