It’s easy to go shopping and just buying whatever you want knowing that the credit card is there and you can just add it to the rest of the family debt. The problems will start when either there is nothing left on the available spending limit or there are problems paying off the amount that is already owed. Then it will be time to pull in the reigns and begin to pay off the debt and make sure you all have a bright financial future. As we are now heading towards a new year, why not take a good hard look at your finances and see what improvements can be made. The ideal way to give your family security, is to cut back on spending, cut back on waste and put a little away for a rainy day.
What To Pay
When the bills come in there are certain things that have to be paid in full. This will be the mortgage, rent and anything owed to the Local Authority. Utility companies are also quite keen to be paid and if they are neglected, there could be a cold and dark period ahead. Finally the only other regular bills that come in will be credit card. These should be paid off as much as possible but as long as the minimum payment is covered, there will be no immediate problems other than interest being added.
The Years Of Needs Not Wants
For many this is an ideal mantra and will allow them to get by when others tend to struggle. Think about what you need rather than what you want. Needs will be food, a place to live, a way to get around – often employment will depend on the ability to drive to the workplace and a little extra for some treats. Expensive new clothes and foreign holidays are all well and good, but can easily be cut back when the going gets tough. If something is really needed then there is an excuse for using the credit card, but if you just want it, then put the card away.
The Way Forward
Firstly, you need to realise that you need to change your ways but also know that there are few financial debts that cannot be repaid. The best way to do this is to set out a budget. Here you need to list everything that goes in and out of the account. Once the final figure is known you can work out what can be paid off each month. Once you have lived with a budget for a while then try and reduce certain areas. Change the supermarket you use, or drop a brand and often you won’t notice the difference in wither taste or performance when it comes to cleaning products. Once you find that you have your debts under control, then you can start to build an emergency fund. You never know when the boiler will break down or a larger than expected bill will fall onto the doormat. Now you have sorted out the way forward the only thing to do now is to remember it and keep to your budget.
Justin Kerr, the author, is a leading financial journalist. He has written many excellent books, research papers and posts about various complex financial topics and policies. His last post dealt extensively on binary options trading lessons and ways to perfect it.