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Can I Get a Debt Consolidation Loan?

Do You Have to Have Good Credit to Get a Debt Consolidation Loan?

If you're struggling to pay off your debts and can't find a good way to increase your income, you may be thinking about finding relief by other means. As you probably know, there's an entire industry that's devoted to helping folks pay down their consumer debts in a timely fashion. A significant amount of the activity that occurs in this industry involves a practice known as debt consolidation lending.

Debt consolidation loans are large loans that may carry relatively low interest rates. They are ideal for borrowers who carry large amounts of credit card debt. Debt consolidation loans enable these borrowers to pay off their high-interest debts and may dramatically simplify their debt payments.debt consolidation loan application form.

True to the "consolidation" in their name, debt consolidation loans are designed to reduce the number of monthly debt payments that a struggling borrower must make. Instead of 12 outstanding credit card bills, a credit card consolidation borrower only has to worry about making a single larger payment to his or her lender.

If you're behind on your credit card payments, you may be wondering whether you have to have good credit to obtain a consolidation loan. Unless you've been very lucky, your credit score is probably not as solid as you would like it to be. You might have a justified worry that you'll be unable to secure approval for your loan.

It would be ironic if you were unable to secure a credit consolidation loan as a result of your poor credit profile. After all, consolidation loans are designed to help borrowers who struggle with large amounts of credit card debt. Most such borrowers have less-than-ideal credit scores. Debt consolidation lenders that adhered to strict credit-score standards when screening borrowers would be cutting out a significant portion of their "target" clientele.

For this reason, it's possible to get a debt consolidation loan with bad credit. Many debt consolidation lenders are willing to issue loans to distressed borrowers. Unfortunately, such loans typically come with some problematic drawbacks.

High interest rates are one of these drawbacks. Whereas "prime" borrowers may be able to secure low-interest consolidation loans, borrowers who have poor or mediocre credit may have to pay through the nose for their loans.

Even in this low-rate environment, it's not uncommon for lenders to charge annual interest rates of 15, 20 or even 25 percent on their sub-prime loans. This might substantially raise your borrowing costs and negate any of your loan's potential savings. If you can't save at least 5 percent on your outstanding debts with a consolidation loan, this course of action may not be worth the hassle.

The potential need to collateralize these loans is another serious drawback. Although each lender's policy is slightly different, many may require you to put up some collateral as a condition of your loan. This could take the form of a car, house or other valuable asset. If you become unable to make the payments on your loan, this asset could be subject to seizure.

The prospect of doing further credit-score damage is a final weakness. Since these credit facilities are so large, the monthly payments on credit card consolidation loans can be massive. If you fall behind on your loan or become unable to make your payments at all, you run the risk of a credit-damaging default.

Once you default on your loan, your credit score will drop precipitously. In turn, this will make it difficult for you to take out another loan. Even if you can find a lender that's willing to approve your application, your new loan would probably carry a far higher interest rate than your original credit facility.

Before you take out a debt consolidation loan, you'll want to consider all of the credit relief options available to you. Although you may be able to secure a loan with a poor credit score, there are certain risks associated with this course of action. In the end, you're the only person who's capable of determining how best to tackle your unsecured debt burden.

by Lacie Kehm

Recent Articles

5 Credit Card Mistakes Children Might Pick Up From Adults

Family shopping online with credit cardThere are a lot of credit card mistakes that you will make over the course of your financial life but if you are a parent with children at home looking up to everything you do, these mistakes suddenly becomes lessons for the young ones. What you do, how you act, the way you react to situations in life will always be used by your children as a standard of how things should be done.

Parents are children’s first teachers in life and they mold their character and behaviour based on what they pick up from adults around them. With this in mind, you need to be more careful with how you manage your finances especially your credit card usage around the kids. They will accept wrong financial behaviour from you and deem them as appropriate. As Creditcards.com shares that the average card balance is over $5,000 per user, this becomes an even tougher job.

You might not realize it but you are being observed by your little ones with the way you deal with present day problems. From how you handle your relationship with your husband or wife to how you manage the household and even how you use your credit card in everyday purchases. When they see how easy it is to pay for things because you just swipe and sign, they might find it hard to associate it with actual money payments.

They do not see any money transfer from one hand to another so the idea of money takes another form in their minds. What older people have been accustomed to where they work, earn money and pay for purchases with actual dollar bills. This exchange had a big hand in helping older people understand the value of money because they see the transfer of funds. This is one of the reasons people have so much credit card debt.

Credit card mistakes kids see in adults

If you have children at home, here are a few things you might want to guard with your credit card use. This will help you impart practical and useful financial lessons over to your kids.

  • It is acceptable to pay the minimum amount. When you opt to just pay down the minimum amount, you are sending the wrong message to your kids and you are digging yourself into a debt hole. Minimum payments allow lenders to add various fees and charges on your next bill and it increases the amount you pay over time. That minimum amount is just a suggestion and what you need to be concerned about is the total amount due. When your children learns that adults just pay the minimum amount on their cards, they might just do the same and copy that when they get older.
  • Chase those rewards no matter what. One thing credit cards have over cash payments is the fact that lenders are able to offer rewards and other incentives for using the card. It can be points system where it accumulates over time or a discount over the purchase or even cash rebates that goes back into a consumer’s bank account. From all these, credit card mistakes can still come out especially when consumers start chasing these rewards regardless of purchase necessity. They will buy and use their card just to get the points and that is a wrong message for the kids who will look up to the actions of the the older people. You also need to look into the difference on late fees as Forbes.com explains that there are reward cards that put a higher fee than regular cards.
  • Always transfer to a zero percent card. Having a zero percent interest card is usually because there is a promotional effort on the side of competitive lenders in hopes you getting your business. The idea is you get to transfer your balance over to them and it seems that you do not pay interest on that amount. You would then transfer everything you have just to save on payment but be sure that you are able to read and comprehend the fine print. There are cases that the zero or low interest will only be for a specific period of time after which the new lender can assess a higher rate – sometimes higher than or just the same as your past lender.
  • Use your card as often as possible. This can stem from the desire to get rewards, convenience or worse, lack of cash. But everything in excess will not be good for you including credit card use. You need to balance your payment method with cards, cash and even online payment. You do not need to use credit cards all the time especially if you are already having a hard time tracking what payment goes where. Sit down and take a long hard look at your budget and plot out where the payments are coming from. Once you get a good handle on this, be sure to stick to it. Credit card mistakes such as these ones tends to stick with the young generation because they think that there is no limit to how they use their cards.
  • Get as many cards as possible. Some consumers plan to use a specific card for a specific purpose which leads them to opening up more accounts than they want. There is a card for gas and another for shopping. There is a designated card for groceries and even for the utility bills at home. Some even have a separate card for car maintenance, house upkeep and for emergency. Combine all these and you might have more accounts than you can handle. This approach can work for some people but it takes time and skill to balance and juggle all these cards. One wrong payment and it can cause a ripple effect on the others that would be hard to track. Teach the younger ones how to manage a few cards and show them how easier it is because even people with high scores make credit mistakes such as this one.

Credit card use is not just an issue for everyday consumers because even in the presidential race, credit card use is being used as an ammo against some frontrunners. Take a look at this video:

How to use your card to help your finances

Credit cards has been getting a lot of flack in the past for all the wrong reasons because consumers have been quick to point out how their finances have been ruined by that small plastic card. But at the end of the day, it is still the consumer that ultimately makes the decision on how to use it. In fact, credit cards can actually help people with their finances.

  • Understand how it affects your credit score. Credit card mistakes can easily ruin your credit score so in light of that, imagine what it can do to help you restore your score if used correctly. You need to understand the factors that surround it such as payment history and even amount owed as explained by MyFICO.com which are a big factors in putting a score together.
  • Assign specific cards for specific use. This is one of the easiest ways to manage your cards because you are forced to watch how you swipe that little credit plastic whenever you are out. You can even recruit the help of your kids to help remind you to only use a specific card for specific purchases. This in turn also teaches them the value of proper credit card use.
  • Show your kids how you pay your bills. This makes them understand that whatever purchases you signed for in the past does not magically disappear. It comes back as a payment obligation that needs to be addressed and paid up. This lesson can help them in the future and prevent them from knocking at your door on weekends asking for dole outs because they are having problems catching up with their card payment.
  • Always negotiate with your lender. This is one of the things that most consumers usually overlook. This is because most people would only consider calling their lender when there is a problem with their account. But if you have been making on time payments and have been a good customer,  it is possible to ask for a lower rate from your lender. Of course, it is not something that can be automatically given to anyone who calls in but it is worth a shot.

There are a lot of credit card mistakes that people make in their life. The sad part is that when kids are around, they adopt these misconceptions thinking that it is normal and repeat the same mistakes all over again.

These 4 Items Can Spell Financial Disaster Before Year End

Holiday shoppingThe last thing you need as the holidays come closer is getting entangled in avoidable financial disasters. Avoidable because there are some financial problems that you cannot seem to get out of regardless how well you prepared. Just as there are accidents in life, the same can apply to your finances where a curve ball can surprise you when you least expect it.

Financial control is a delicate balance and that couldn’t be anymore harder during the holiday season where buying gifts but keeping out of debt is a tightrope act for a lot of people. There are some who have been planning for the holidays for months in advance in an effort to keep their finances intact while others are just looking to wing it.

It is easier for those that planned for the holiday expense compared to those that did not because they at least put in some effort into the season. Needless to say, these are stressful times when you have to make sure that you get to visit or invite over friends and relatives and have a gift at hand for all the important people in your life.

USAToday.com explained in an article that one of the biggest problems and fears of American consumers is taking in too much debt and that is sure to pick up with the holiday expenses looming just around the corner. Although there are a lot of people who have already started buying gifts for the holidays, a lot more are still waiting for the day after Thanksgiving sale.

Financial problems can arise from these items

Here are some of the most common problem areas that consumers normally face as the year comes to a close. These are oftentimes the leading causes of financial disaster in a household budget.

  • Holiday shopping abuse. The holiday expenses really puts a lot of people off track with their year end shopping. It is even harder now because the new issuance of chip credit cards can slow down the process with a lot of people still trying to get used to the new card says ChicagoTribune.com. From what was a momentary swipe of the card with the old cards would now be a few seconds if dipping for the new ones. Regardless of the process, consumers need to keep a close eye on their purchases this holiday season.
  • Lack of financial goal for the coming year. If you are into sports then you would understand the importance of having a clear cut goal for whatever it is you are doing in your sport. If you are playing golf then the idea is to win by hitting the ball and getting it to go in with lesser swings than your opponents. In basketball, it is to put in more points by shooting the ball in your side of the court compared from the other team. The same with finances where having a goal is very important. One way of improving your chances of reaching your financial goals is to have some that you will work hard for to reach.
  • Absence of savings. Statisticbrain.com shares that the average savings for an American family is only roughly a shade below $4000. This might not be enough for emergency expenses or even just to welcome the coming new year. You need to make sure that you are able to put in some amount aside for various purposes. It can be your reserve funds or for gift buying for the holiday season. It can even be a specific amount to be able to make a significant dent in your student loans.
  • Bigger expenses than income. One of the things that you need to look at is your household budget and a path straight to financial disaster is when your income is being overshadowed by your monthly expenses. Before the year ends, you need to look at your budget and determine where your expenses are in terms of your income. If that is the case, you need to make some drastic adjustments on the current budget and take a look at your spending to determine how you can put it in check.

Getting your holiday shopping under control

There is no question that one of the biggest contributor on expenses before the year ends is holiday shopping. The day before Thanksgiving and the few days left before the year ends are some of the costliest times of the year. Here are a few tips to help you manage the shopping and avoid potential financial disasters.

  • Create a list of people and budget. It is important to have a list for your holiday shopping so you do not go out and blow all your money on just a few gifts when you actually want to thank a lot more people than that. You need to have a list of the people you want to buy gifts for and an estimate of the amount you want and can spend per person. This helps you keep track of what you have already bought and who already has a gift.
  • Stick to that list. One of the most important budgeting skills consumers need to master is not just having a list but following their list. Consumers need to remember that it is not a suggestion that they can choose to follow from time to time. Not following their list defeats the purpose of making one in the first place.
  • Look for ways to lower down cost. Holiday shopping can lead to financial disaster when you get lost with your purchases and get caught up with the season of giving. One way to lower down your expenses during the holidays is to personalize or use your talents in your gift giving. If you know and love baking, you can bake cookies or cupcakes for people that you love. If you are a photographer by hobby, you can give your friends and family some of your best work that they can frame and hang up on their walls as their home decor. You can use your talents and skills to help lower the need to head out and buy expensive gifts for your loved ones.
  • Buy early. If you really need to buy gifts, you might want to start buying early so you can save on both time and money. Money because there is a good chance that the earlier you buy, you catch the prices before they surge up for the holidays. If it so happens that you bought at full price and it goes on discount in a few days, there are some merchants and card companies that offers price protection and reimburses consumers the difference. You also spare yourself the hassle of having to visit the stores with hundreds of people fighting over the same products.
  • Use your credit card wisely. Your card will be one of your main tools in buying gifts for the holiday season so you need to prep it for the impending expenses. If your card has a significant balance on it, it is best to pay it down or pay it off entirely so you can use it to buy gifts. If you believe you will need a higher limit then call your lender and ask for an increase in your credit limit. Just be sure to pay off your balance at the end of the month.

Holiday shopping As the year ends, you can look at specific areas in your finances to try and end with a high note and start the new year on a positive one.

5 Ways Your Emotional Character Can Help With Money Management

Young man sitting on couch at home wrapped in messy duvet suffering depression and emotional crisis, grieving in solitude and feeling lonely and desperate in dim light with shadowYour emotional character is one of the most important foundations you have in your life. The stronger emotional quotient you have, the better you are at handling different aspects of your life such as your finances. Your emotions can help you reach your financial goals or it can also distract you and keep you away from your target.

There are definitely a lot of money management tips you can look into when you are trying to be better with your finances but there are a lot of areas you can overlook including your emotions. You might be too focused on increasing your income as you take in a second and even a third job just to make ends meet. You might also be trying to master the art of frugal living in an effort to lower your expenses.

These can all help in managing your money but if you focus too much on some aspects of your finances – it might cause you to overlook some areas. Just like when you are into bodybuilding and going to the gym regularly. You might be focusing too much on what you can see in the mirror not knowing that you are not developing your back muscles all along.

The same goes with financial management where Gallup.com shares one big concern – ther are only one in three American consumers who are able to prepare a detailed budget for their finances. This is unacceptable which could lead consumers to getting way in over their head with their expenses. If they are not able to monitor their finances, they could be heading to a multitude of money problems.

But this is not the only culprit to why Americans are in debt because emotions are perceived to have a big effect on the way you handle your money. You need to stay in the middle because extreme emotions tend to do a number on your purchasing mentality. There is a tendency that if you are too happy or too sad, it follows that you make irrational decisions and purchases.

Being emotionally prepared to handle finances

Ibtimes.com shares that emotion is one important factor in making money decisions. Here are a few things that you might want to look into when you start taking into account your emotional character when planning your finances.

  • Thinking positive. This is one of the most important exercise you can make when you are actively thinking about your emotions and its correlation with your finances. When you always think you will not be able reach your goals such as paying off the house or saving for your children’s college fund, there is a big chance you will really not make them happen. This is because you are already conditioning yourself for failure and lowering your standards. This can result to half-baked effort because you believe you will not get to reach them anyway so why bother working hard for it? You need to think positive and believe that you will reach your financial goals so your actions can support that belief.
  • Have a strong will. Problems will come your way and things will not always work out the way you want them to be. If your strategy is to give even before you have found a way to persevere, you will always find your financial goals out of reach. Having a strong will is one emotional character you will benefit from greatly. It will help you weather tough times and get you to see the silver lining ahead.
  • Know when you need help. There will be times that in order to persevere, you will need help. It can be financial help where you can look at options like taking out a bank loan or crowdfunding to help your finances. The bottomline is that there will be instances where you need to look at your support options. It might not even be money because oftentimes you just need a great advice or a shoulder to lean on.  

Here is a video that can help explain crowdfunding a little more:

  • Be reasonable with your goal. If your target is to be able to buy a house in three months but you don’t even have any savings, money or a steady job, that would be a tough goal. If you are trying to negotiate for a higher offer but you don’t even have any job history to show for it and there are a lot of applicants waiting in line, it might not be wise to up the offer. It is important to have a strong will but you need to time it accordingly. If you want to buy a house, save up for it so you can put a down payment on a mortgage loan. If you want a high paying job, pay your dues by taking in experience or post-graduate studies. You need to work hard and smart to reach your goals.
  • Cultivate self awareness. This is a little harder because being self aware means understanding your needs in a psychological and physiological level. This tells you and ultimately guides you with what you need and what you don’t need. This requires listening to subtle clues that you body needs as this is different from one person to another.

Getting emotionally strong

As your emotions play a strong part in your capability to manage your finances better, there are a few things you can look into which can help you get stronger emotionally. It does not require you to break up with a relationship so you get hurt and become stronger the next time around, there are easier ways to go about it. Here are some of them.

  • Learn from the people around you. Forbes.com shares that people can benefit from learning from the best in whatever they want to do. If you are into basketball, you can look at how Michael Jordan played through a game with fever and even went on to top score that game and win it for his team. There are a number of people who perseveres and get things done regardless of the situation. You can take your parents for example where they will go through sleepless nights especially when you were younger just to take care of you. They would be up all night looking after you and up all day working to provide for the family. Learn from the experiences of the people around you and try to draw inspiration from their positive actions.  
  • Mistakes are lessons you just discovered. You will encounter a lot of challenges in life especially financial mistakes and you just have to pick yourself up and learn from those hurdles in life. It helps build up your emotional character and makes you stronger and a lot wiser. If you come to think about it, you sometimes have to undergo these challenges to come out a better person.    
  • Be physically healthy. It might sound a little confusing at first but there are financial benefits in keeping healthy and how it relates to your emotions. There wa a survey once done on some of the most successful people in the world with regards to their habits and exercise was a part of their habits. Apart from the body releasing endorphins when you exercise which gives you a positive mood, being healthy clears your mind to be able to make important decisions. This helps you stay on top of all your decision making especially money management.

Your emotional character can be a great focus point when you are trying to focus on money management. Strengthening your emotions can do wonders for your finances.

You Can Start Saving Today By Looking At These Expenses

Inserting a coin into a piggy bankIt is important to start saving as early as possible as much as possible to prepare for your future. It can be to have money to pay for college or even post-graduate studies. It can be to have some funds to fall on when you lose your job. Or even a sizeable amount to be able to put a big down payment on a house. It is also important to save for your retirement needs.

You might remember your parents asking you to put in any spare change you might have or find around the house in your piggy bank. You might have also asked your parents to help you put up a lemonade stand outside your house. There could also be times you had to perform house chores in exchange for some extra money you use to buy console games or new shoes.

All these actions helps you nurture your saving habit and even get you over that fear of saving. But as you get older, life becomes a little more complicated and that piggy bank seems a little bit harder to fill with spare change. That lemonade stand might not provide the amount that you need to put up. And you realize that regardless how much house chores you do in your own house, you will never get paid doing them as adults.

If you are just starting to save, you might be part of the new age of people who seems to be overdoing it as shared by Fortune.com. The data shows that consumers sales has been declining year on year which is possibly brought about by consumers saving their money rather than spending. It is crucial to strike a balance with purchases and saving as the country’s economy depends largely on consumer spending.

Between the two, it is harder to save rather than to spend and it holds true for most American consumers. In fact, there are some who doesn’t even get to enjoy their pay because they have already spent everything way before they received their money. Saving gets tougher as you get older because life gets more complicated.

Expense accounts to look at to save money

But this should not stop you from trying to put aside an amount for the rainy day. You can actually start saving today by making small changes in the way you handle money. You do not have to make drastic measures in your budget – start with baby steps. Here are some of those small changes that can have a big impact in your finances.

  • Dining out. You need to regulate the number of times you are eating out because it is eating up into your budget. You can socialize with family and friends or try out a new restaurant in the area or even go out to celebrate a family occasion. But if you find yourself eating out almost everyday, you would find yourself spending more than you can chew. Frobes.com in a recent survey shared that Americans usually spend about $1000 a year in lunch money. That can quickly double if you include dinner to that amount which tends to be a bit pricier than lunch. Try to cut down on eating out and see if you can brown bag your lunch and cook dinner.
  • Coffee. There are a lot of money lessons from making coffee and one that will stand out is the amount you can save from brewing your own cup at home. The usual habit of people nowadays stem from laziness and prestige where they prefer to buy signature coffee made exactly the way they want from milk to sugar to espresso shot. But you can do the same at home and you get to invest mostly on time to wake up a little earlier to make your own coffee.
  • Gym membership. If you are not using it, stop paying for it. Your body will not magically start to shed away fat and reveal muscles only because you have a gym subscription. It is best to maximize what you are paying for and head on out to your local gym. If your idea of workout is getting up from the couch to get some beer in the fridge only to come back and watch tv the whole night then better cancel that gym membership.
  • Medication. This is one of the things you can save up on when you exercise regularly and watch the food you eat. The healthier you are, the lesser you have to depend on over the counter medicine to take care of avoidable aches and pains. Take care of yourself and your body takes care of you.
  • Transportation. How far are you from your daily destination either from work or from school or even both. Can you bike going to and from or can you take public transportation? Would you consider carpooling with other people to save on transportation cost? There are a lot of things you can consider to help lower down that expense almost immediately.
  • Insurance premium payments. You can check with your insurance company how you can lower down your insurance premiums but before you do that, scout competitors and see how much they would match up with your current payments. This is one advantage of competition – you get to compare and get the one you are most comfortable with. Lower insurance payment can help you start saving a lot more today.

Stepping over the line

There are times when you are too passionate about things that you completely go over the line. There are some journalists that in their desire to get compelling news put themselves on the line just for a story. There are also some consumers who would pull off double shifts and get home the next day just to be able to save much more only to find themselves in the hospital for exhaustion. Here are a few things you need to watch out for.

  • Frugality is taking its toll on your family. There are signs that you are taking frugal living way too seriously. This can have negative effects on your finances and even the way you live. Dumpster diving just to save money on food is not a good idea such as foregoing basic medical needs because you do not want to spend and would rather save the money.   
  • You miss out on life experiences. Just because you did not want to spend money, you do not celebrate your child’s birthday or buy your wife a gift for your anniversary. Balance these experiences and make sure that your money doesn’t get to control your life but rather, control your money to have the life that you want.
  • You give up needs because for impulsive wants. There are ways to get your credit card ready for the holidays according USNews.com but be sure you know how to use them. You might be overdoing your saving that you give up eating that food that you want but binge out the first chance you get. You might not buy those shoes that you need but it haunts you so much to the point that you buy the first shoes you see online.

You can start saving as early as you want to cultivate the habit. This can help you as get older and find that life gets a little bit tougher and more complicated. Saving can help you with your reserve funds or even for your retirement money.

Why Is Paying Rent Better That Paying A Mortgage Loan For Some People

Calendar mark  with Pay rentHaving a house largely remains as a top American dream but there are a lot of people who are still paying rent. it is great to have a place to call your own with your kids running around the yard while the dog is chasing that ball. It is also exciting to undertake small DIY projects around your own house. Doing the same on a rented house might get you in trouble with the landlord.

But the truth to the matter is that home ownership has been on a decline for the last eight years. According to NYTimes.com, it is now at about 63% putting the rental homes at 770,000 increase every year. A lot of people are renting out the place they are in compared to those who are investing on their own home.

You might be looking for different ways that would positively impact your financial position and renting has come up as one of those decisions you have to make. Housing is important because it is one of the very basic needs of people. You usually have two ways to go about it – rent a place or buy a place. Though there are some lucky ones who gets their parent’s homes provided they want to stay in the area.

So why are there more people paying rent rather than paying a mortgage loan every month? There are several reasons but what would be echoed by most is their lack of ability to save up for a down payment on the loan.

Apart from the lack of down payment, people are also postponing homeownership because they find a lot of benefits to renting. They think that their life will be so much easier if they rent instead of own their place. After all, homeownership entails a lot of responsibilities

Benefits of renting

Then again, what are the benefits of renting over owning a house? We can cite three specific examples.

Landlord takes care of repairs.

First of all, you do not have to burden yourself with repairs and maintenance issues in the house you are living in. You will appreciate this fact when winter is right at your doorstep. It is usually during this season that you have to make sure your doors and windows are in good condition to keep the cold outside and the heat inside. When you are renting, you do not have to worry about this. You simply have to call your landlord, tell them that you notice something in the house that requires repair and you let them do the rest. It is their job to hire the contractor to fix it and best of all, pay for it! A home repair can compromise your monthly budget. But if you are just leasing the place, this is a danger that you should never have to worry about.

Landlord pays the house insurance.

When you own your house, you need to buy insurance for it. At least, this is true if you got a home loan to buy it. The bank or financial institution that lent you the money will require you to get insurance – at least for a specific period during your payment term. But when you are renting your space, your landlord would have to shoulder this expense. Of course, USNews.com shares that there is a difference between property tax on a rental as against a house they are living in.

But one thing you might want to have is insurance on your things because if a fire breaks out, you would need to replace all of them. The landlord would have his house covered but that does not automatically include your belongings. That would be a premium you need to budget for but better than not having one and much lower than property tax.

Here is a video to understand insurance better:

What you are missing out on mortgage

These and a lot more reasons would definitely make you want to rent rather than get a mortgage loan of your own. There are a lot of things you need to remember before getting a mortgage and they might just be too much for you. But there are actually a few things that you could be overlooking as you stay in your rental. Here are some of them.

  • You would be paying rent your whole life. You might find it easier to rent but you need to remember that as long as you are staying there, you need to pay rent. Regardless if you have been staying in that house for 40 or 50 years, you need to pay rent. Another situation you need to understand is that there is a big chance that your rent will only increase over time. What you have been paying in the past year might not be the same for rent 10 or even 20 years down the line.
  • You are making your landlord rich. It might be convenient for you to just pay rent and let your landlord do all the worrying about the house but at the end of the day, you are just making them rich. Of course they are just filling in a housing gap but wouldn’t it be better if you are helping your finances rather than theirs? As you make payments on your mortgage, you slowly increase your equity on the house and simultaneously increasing your net worth as well.
  • You pay more in mortgage loans. But you don’t pay anything in a couple of years when you take out a mortgage loan. Housingwire.com shared that average mortgage loan is already at about $290,000. This means that the market is picking up again on price but regardless what the amount is, you can pay it off at some point in time. After that, you do not have to make anymore payments. You get to put that money elsewhere like actively pursuing a hobby or helping out kids and other family members with financial help.

Unique characteristics of your mortgage loan

You might be looking for more convincing that taking out a mortgage loan is better in the long run. If you are, then here are a few reasons why you might want to take up a mortgage loan in the future.

  • It increases your net worth. This is one of advantage a mortgage loan has over renting because as you make payments on the house, it simultaneously increases your net worth. It helps you improve your financial standing as you progress with your payment s.
  • Lowest interest rate. Your mortgage is a secured loan meaning your lender has a lien on your house. If you fail to make the payments, they can get the house back. It also for this same reason that your lender would put a lower interest rate on your mortgage. Because of this, your mortgage would normally have the lowest interest rate among all your debt expenses. So you can make only the minimum payments and concentrate on other financial obligations such as credit card purchases or payday loans.
  • Financial lifeline. When worst comes to worst and you have your backs against the wall, you can loan against the equity on your house payments. If your mortgage loan is at $200,000 and you are already halfway with your payments – you can talk to your lender on taking a loan against the amount you have already paid or equity.

While paying rent could work for some people, this is about balance and if you are at a point where you need to rent while saving up for a downpayment on a house then go ahead. If you are trying to get your credit score to improve to get competitive rates from your bank then rent in the meantime. If you need a few years to focus in your job and you need to get a place that is close to your office then rent.

Financial Control Is A Delicate Balance

Money tied with a threadHaving financial control is imperative in putting some form of structure in the way you reach for your financial goals and dreams in life. If you cannot get a hold of how you spend your income even on a monthly basis, you will have a multitude of problems You do not get to pay your financial obligations on time, you overspend on unnecessary things and you might not even be preparing for retirement.

Not having a good grasp on your finances is one sure way of getting into financial trouble. It does not give you the opportunity to manage your money the best way possible. If you are out of control and leave everything to chance, you are on your way to failure. Luck is not just about having a lucky bounce or chance. It is about meeting those situations with hard work and dedication.

There are of course flukes like winning the lottery but you cannot rely on chance your whole life. You need to work on getting your finances in order by slowly and methodically saving and spending according to your lifestyle and goals. These two as well as adjusting to changes that may come your way are important in managing finances.

This is more important now as a study is showing that credit card debt is on the rise again. Cardhub.com is expecting card debt to reach $900 billion by December 2015. This amount brings the average balance at about $7800 which would be the highest since the Great Recession in 2008. This means that a lot of people are again using unsecured loans – the one that normally has the highest interest rate and off the chart fees and penalties.

Financial discipline has its own pros and cons

Too much of something can be bad for you. If you have too much ice cream out of frustration because of a failed job interview, you might have a failed doctor’s appointment next because of too much sweets in your body. You can drink from time to time to socialize but if you drink to get drunk every time, you can expect your body to rebel and your liver to need some help. Here are some of the pros and cons of financial control.

Grocery shopping

It is important to have a grocery list before you head out the door. This starts from looking at what you need around the cupboards and the fridge so you know what you need to buy. When you start filling up your grocery cart, you tick off your list one at a time so you end up with what you need not what you want. This helps you be in control of your budget.

But on the downside, too much restriction and control on what you can buy make you lose out on special offers and prices. There are some great deals that might sometimes be not in your list and too much control can make you miss out on long term savings. You need to be able to balance what you need in your list and deals where you get to save more in the future.

Cooking and eating out

One of the main benefits of cooking food at home is you get to save a lot of money from eating out. It is also possible that you learn a new skill as you cook night in and night out. You are also sure that your family gets the proper food and nutrition helping them grow healthy. You get to dictate the ingredients on the food knowing the freshness and the quality of each one.

One of the cons of total financial control on this aspect of your budget is that you might miss out on some social functions and even some after office get together. There are also moments when you need to celebrate a special occasion such as birthdays or an anniversary. Cooking food at home can work but there are times that eating out would be much better.

Buying a car

USAToday.com shares that the price of a used car went up 5.7% to $16,800. This is still way lower than buying a brand new car but it just goes to show how important cars are to everyday living. Buying a used car can help you save a lot of money especially if your budget is quite tight. It gives you the ride that you need either for work or for your business.

The downside of being too cheap in choosing a used car is that you tend to look at the price only. Yes that is a big factor but you also need to consider the state the car is in. Don’t let that shine and tire black fool you. You need to check under the hood, under the car and take it for a spin a few times. This is because you might end up paying more for the maintenance of the car in the long run.

Buying a house

There are a lot of things to remember before getting a mortgage loan but one of the primary concern of consumers is the price. The selling price of the house is usually a deal breaker when it gets too high and too expensive. That is why some consumers choose the lower-priced homes so they can meet their budget, stay afloat and have financial control.

But focusing too much on the price of a house can take you away from other potential benefits. Take a look at the community and how it is located from establishments like the grocery, school and even hospital. Take a look as well at the condition of the house and be able to estimate how much you would need to make a few changes to make it beautiful. You might lose out on these if you focus too much how much the house is.

Higher education

It is no secret that having quality higher education can help you achieve your plans and goals much better. But for a lot of people, this means taking out student loans because the price of education is rarely low priced. But the tradeoff is that you have a much better chance of landing a higher paying job compared to high school graduates.

On the other hand, the student loans that you would accumulate would oftentimes make this seem like a bad idea. WSJ.com recently congratulated 2015 graduates for accruing the highest average loan balance to date – $35,000. Student loans has now climbed up next to mortgage loans as the biggest debt accounts consumers have in their household budget.

Getting ahead of the game

There are a few things that you can do to help you get some balance in your efforts of exerting financial control in your budget. There is nothing wrong with being in control, but there are some financial tips you can benefit from.

  • Put some elbow room in your budget. You need to put in some allowances all over your budget. It is hard to live down to the last dollar when budgeting. You need to have a few allowances especially for the things that you need. This is a balance between your budget and long-term savings.   
  • Depriving yourself can backfire. This is one of the usual pitfalls of consumers because when they start to look at their budget and make drastic measures, the first ones that usually go are their budget for entertainment or rest and relaxation. There was once a debate on whether we live to work or work to live. But the idea here is balance and totally depriving yourself of a movie or shopping money can backfire and lead to uncontrollable spending.
  • Have a support group. Surround yourself with people that you love and know and more importantly, trust. They can get you back on track when you start to wander off on to being too strict again or too lax. But as you form this support team around you, try to be a support person for them a well.

Financial control is something that a lot of people do not possess while others, they have too much of it and restrict their movement. The key here is balance and trying to stay in a comfortable position to help you control your budget but at the same time enjoy life as well.

Too Much Debt Can Ruin Your Life

man carrying a house and a carGetting too much debt is easier than repaying them. What can take years to save up can all be used up with one signature. It is much like a person’s or even a company’s reputation where it takes years to build up by doing what is right, one wrong move or one lapse in judgement can bring all that hard work crumbling down.

This rings true for your savings and finances in general. As you save your money and even find a way to fast track debt payments, one wrong move, purchase or even investment can negate all those years of saving. It can effectively put you in so much financial trouble. You then have to go back to square one and plan how you can get out of that mess.

It is also possible that you might be making small mistakes as you go along and never notice it. As it accumulates over a few years, it becomes unmanageable and explodes into too much debt on your ledger. You try to trace back what happened and as you dig through your finances and budget, you pinpoint the problem that has been going on for years.

Nerdwallet.com shares that consumer debt at present is a shade under $12 trillion which is a huge amount that includes mortgage and surprisingly student loans. College and post-graduate school loans has been on a steady increase even after some consumer loan items such as credit cards and auto loans has been improving.

What happens with unmanageable debt

When you get into too much debt, you feel the effects right away and the sad part is that it is not only limited to your finances. It gets you emotionally and physically and even affects the way you think. Here are a few things that you would notice when you are neck-deep in debt.

  • Selling an organ. It is illegal to sell an organ in the country under the  National Organ Transplant Act of 1984 (NOTA). Apart from a hefty fine of at least $50,000, this comes with about five-year prison sentence. That being said, Credit.com shared that there about 30% of the respondents from an online poll suggested that because of too much student loans, they are toying with the idea of selling an organ. This of course does not affirm their desire to sell their organs just to get the money they to pay for their loans. What this figure shows is how some people, especially the younger generation feel hopeless with their finances to the point that they are willing to risk their health and delve into illegal activities.
  • Live in a car. When you get behind on your car payments, your biggest concern is that your car will get repossessed by your lender. But there are some consumers who either chose to live in their car for lack of option or just to save on rent money. There are some full time time New York city workers who are homeless and lives in their car according to NYPost.com. This is just sad because they have full time work and employed by the city no less but they do not have enough to pay for rent. There are also some people who also chose to live in their van much like Ken Ilgunas and his Ford Econoline van when he went to Duke for post-graduate studies. Low income or fear of too much debt can make people think about living in their car.
  • Family friction from borrowing too much money. One of the first few people you would look to ask for financial help when you are deep in the red is family and even friends. This is because of the simple logic that they know you and there is a big chance they would say yes. But one thing you might overlook is the fact that asking friends and family for money causes friction. It might come from being forced to lend you money even if they also need it. This usually happens with parents who are always there for their kids and does not think twice in dipping into their retirement fund or worse, getting a home equity loan. The same with friends and they would sometimes start to avoid you in fear of being asked for more money.
  • Bankruptcy. Bankruptcy is usually a last resort for people who are not able to fulfill their financial obligations anymore. They now heed the help and protection of the law to get their finances in order. This is them basically saying they do not have money to pay their debts and loans and is asking the court to help them settle it out with the creditors and lenders.

Here is a video to understand bankruptcy.

Financial solutions that work

Prevention is better than cure would be something you will usually hear from your doctor. But this can be applicable with money management as well. But the sad reality is that a lot of people go to the doctors when they already have serious medical conditions. The same with finances, there are people who only takes a look at their budget when they are already in debt. If you are in this situation, here are some things you might want to look into.

  • Debt consolidation can be key. One of the reasons why some people get into debt is that they are not able to follow their payment schedule. This is important because late payments can lead to delinquency and default and can have fees and charges to go with it. One of the many benefits of consolidating your debt is that you combine most, if not all your loan and debt expenses under one account. This means one payment date, amount and interest rate. This can help you remember your payment obligation a little easier.
  • Pausing on your expenses. Separate your wants from your needs and establish guidelines in pursuing your wants. You cannot fully deprive yourself from those luxuries in life but you have to prioritize your finances. Stop with frivolous expenses and see how you can make debt payments first.
  • Getting professional help. There are professionals that can help you put some sensible form and structure to the way you manage your money. Just like how professional basketball players need professional help when it comes to different aspects of their game. It can be in strength building or conditioning or injury management. Even professional golfers consult their caddies for in-game decisions. You would benefit greatly from professional help especially if you have too much debt already.
  • Overhauling your budget. When a project does not work, one of the first things that you do is to go back to the plan and see what went wrong. The same can be done when you find yourself in a pile of debt. But one challenge is that there are only about 33% of American consumers who has a detailed budget. This is according to the study conducted by Gallup.com. This means that there are a lot of people who does not have a budget. You need to have one because this is where you fine tune and improve your finances. This is one of the single most important items in your journey to reaching your financial targets.

One of the biggest problems you face with your finances is being in too much debt. This puts you off your game and you tend to shift all your focus in paying it off. Instead of using your time, effort and money to improve your life, you are forced to use your resources to pay off what you owe. The more you pay your interest, the more you make your creditors rich.

5 Ways To Positively Impact Your Financial Position

Mature couple doing family finances at homeWe all want to strengthen our financial position. Regardless of your current situation, we all strive to improve our finances. If you think about it, we were prepared for this task even as kids. Why do you think we are taught to save in our piggy banks? Because we need to learn the value of saving so we can avoid debt.

Why do you think you had to do house chores before you received your allowance for the week? Because you had to learn that money doesn’t grow on trees or that they do not magically appear in your parent’s wallets. This is also one way your parents taught you finances. The automated teller machines or ATMs doesn’t dispense money at will. You need to work hard in exchange for those funds.

Why do you think we are required to go to school? So we can graduate and qualify to work in a high-paying position in order to have the finances to pay for our needs. This is usually what’s at the back of your minds when you pursue higher education especially that several surveys have proven that college graduates really has an edge with the salary level.

Although there are a lot of lessons learned that are influential who we will become as adults, one of the most important qualities that we need to develop is our ability to manage our finances. Once we understand how to use financial management to our advantage, we can always rise from any monetary situation. We will always know how to bounce back and improve our financial position especially if this will help you stay away from the average credit card debt of about $15,000 according to Nerdwallet.com.

5 different ways that you can improve your financial situation

There are many ways that you can improve your current financial standing. However, all of them have the same bottom line – you need to free up some money so you can afford to invest it to open other sources of income. Whether you choose to cut back on spending or you decide to earn more, that is besides the point. What you want to happen is to force yourself to save a portion of your cash inflow so you can use it as capital to take your financial position to the next level.

To give you something to start with, here are 5 ways that you can improve your current financial situation.

  • Avoiding waste. This is one sure way of helping you improve your cash flow and put some balance in your household budget as well as get closer to financial security. This is especially helpful when you are having a hard time making ends meet. When you get to that situation, you either increase your income and/or lower down your expenses and the latter is easier than getting in more funds into the budget. You need to sit down and take a long hard look at your expenses and identify the ones that you can cut down without too much sacrifice on your lifestyle. If terminating your magazine subscriptions would not hurt then go ahead and discontinue them. You might just be viewing a few favorite channels so call cable provider and check your options of downgrading a plan. You can even brew your own coffee in the morning to stay away from those signature coffees that will set you back hundreds of dollars when you add up the expense in a year’s time.
  • Downsizing your house. When you are looking at improving your financial position, one of the most extreme steps that you can take is to downgrade your house and choose to live in a smaller one just like how Time.com explained. This is a decision that is more prominent with older consumers because they are looking to save on cost as they get older. But you can also consider this to help you save on rent or mortgage payment. But you need to consider and account for miscellaneous expenses that comes with transferring to a new house so you are not caught off-guard.
  • Automating your savings. You need to save money for multiple future need such as retirement or for your children’s college fund. To do this, you need to set aside a certain portion of your monthly pay to make sure that you are able to increase that amount as you go along. One of the easiest way to execute this is to automate your savings. Even before you see your money in your account and have ideas of material possessions you want to buy, have your bank automatically transfer a certain amount to another account. This ensures that you do not spend them all in one go and helps you reach your financial objective. This is also possible with employers where they take your 401(k) contribution off the top before transferring your pay.
  • Decluttering your life. This can apply both to physical items and even detrimental habits. If you have more bread toasters than you need, you might want to consider selling some of them to earn extra money and declutter your kitchen. If you love to drink until you pass out then it might be a good idea to quit drinking. Not only does it help you save a few dollars but it contributes to a healthier lifestyle. That can save you a lot more as it can help prevent unexpected hospital visits and even the purchase of medicines.
  • Investing for your future. This can differ to a lot of people depending on their age and status in life. If you are still young, you might want to pursue a college education as a way of investing for your future. If you already graduated from college, investing in yourself can can be post-graduate studies. If you are already working, you might define this investment as saving for your retirement fund which you can use in the future. Whatever it may be, remember that you need to have a plan in place for your future self.

Getting derailed from your financial plans

You cannot take away the misfortunes in life and there are sometimes no way of of preventing these unfortunate experiences from happening. But there are small mistakes that you are doing that is contributing to those problems. Here are a few of them and it is important to take note of these situations so you can prepare for them accordingly.

  • Getting too much debt. You need to be able to monitor your manage your debt level and have a proactive stance in dealing with them. You don’t just shrug off your shoulders and take debt month in and month out. You need to have systems and safeguards in place to let you know how debt that you accumulated is already affecting your financial goals.
  • Not having a budget. This is just unacceptable when you are trying to improve your financial position. First off, you would not be able to benchmark whatever improvement or deterioration you might have with the way you handle your finances. You need to have a list of what is coming in and out so you can plan for the long run. USNews.com even shared some ways to get started with budgeting.
  • Setting unrealistic financial guidelines. When you set lofty goals that are just too hard to reach, it can lead to too much disappointment that can frustrate and lead you to splurge – much like eating too much after a crash diet. Be realistic with your goals and adjust them accordingly as you go along.
  • Not having reserve funds. You need to have an adequate amount of emergency fund and rainy day fund to offset any unexpected expenses along the way. Getting caught off-guard and not having any funds to manage an emergency can really get you in the red and derail your financial plans.

There are a lot of ways to improve your financial position and you should not take it for granted. The better your finances are, the more poised you are of reaching your goals and objectives.

5 Reasons To Have A Joint Account With Your Spouse

smiling couple at bankTalking about a joint account is not a sexy topic for would be or married couples but it is actually one of the very first items that needs to be done as a couple. There are valid reasons for having separate accounts such as separate credit cards that has been in existence for a long time now. It does not make sense to cut it and take out a new one because your credit score will also be factoring in credit history.

There are are also other valid reasons such as a retirement account because that has to be under only one name. But having a joint bank account whether checking or savings can greatly help promote transparency and marital bliss. That is why this is one of the first things you need to consider before getting married.

It is too early to think of divorce especially for newlyweds but it is interesting to know that one of the top reasons for divorce is financial misunderstanding between a couple. This might be enough to force couples to seriously take a look at their finances and see how a joint account can help them manage their finances better.

Pewsocialtrends.org shares a survey that in 2012, 20% of 25 year olds and above has never been married which has increased from about 9% in the 60’s.  This means that there are less and less people who are getting married in a hurry and finances has a lot to do with it. There are some who prefers to wait it out until they are ready financially.

Benefits of having a joint account

If one of the reasons why people put off marriage is because of their finances, it just follows that it should be one of the priorities after they tie the knot. Of course before then there should have been some preliminary talks between the two of you about your plans including opening a joint account. If you are still looking for the right reasons why you need to have a combined bank account, here are a few you might want to use.

  • Accountability with your long term goals. You will have long-term life goals as a couple and that can vary from paying off your student loans to putting together a college fund for your children because you know exactly how it feels to be in in the red after graduation. With all these goal, you as a couple would map it out financially on how you will get to reach them in the future. Opening a joint bank account makes the both of you transparent and accountable for your share in that dream.
  • Encourages trust between the two of you. It is hard to imagine that you will try to pull off something that can hurt your relationship but having a joint account adds another layer of trust level between the two of you. You might have some issues with either of your budgeting skills and that will reflect in your combined account. If you are having problem budgeting your allotted allowance for the month then instead of taking out money from the account, you would be forced to talk about it first rather than just going to the ATM machine and taking out some funds to cover your need.
  • Guides you with necessary changes you need to make. Your joint account as a couple can also serve as your barometer with which you can measure up your goals with actual progress. You can see how big your emergency fund is or how solid your retirement fund already is. You can take a look at how compound interest is helping you grow your various funds. If you are not yet there and actually behind schedule, you can look use your joint account to see where the money is going and be able to plug those expenses as soon as possible.
  • Easier transfer and transactions. This is one of the many advantages of opening a joint account – you get to transfer funds or pay bills in an instant and with your spouse in the loop. The survey conducted by Pewinternet.org shared that there are over 50% of US adults who are already banking online which means that there is already a big chance that one, or even both of you are already banking online and it is just a matter of doing the same thing for your joint account. It makes bill payments and even loan payments a breeze for the both of you and whoever is free can easily make that online transaction.
  • Uncomplicated access. Overall, having a combined bank account helps the both of you have access to information without nagging the other for details. You can check it anytime you want and your spouse can do the same. You can verify if you are on track with your plans or simply to check if that last house payment already. It gives you both unimpeded access to your account which is an important factor in making informed financial decisions. Here is a video that will help explain more about combining your bank account when you get married:

Long term financial goals

You need to understand that your joint bank account and other financial instruments are just going to be your your tools to reach your financial goals. Think a chess match where you use all your pawns and bishops and all others to win. But what are some of the most common financial goals of married couples? Here are some of them to start you off.

  • Paying off your mortgage loan. Having a house of your own still remains one of the top American dreams and one of the things you need to remember before getting a mortgage loan is that payments are for the long haul sometimes taking decades to pay off. But this is different because as you make a payment, your equity on the house increases and this is a valuable tool in the future in case you want to consolidate your debts by taking out an equity on your house to enjoy low interest rates. But this should not be an automatic decision because you need to remember that you are borrowing against your house increasing your risk.
  • Saving for retirement. For most, this is on the top of their list because they cannot see themselves working until old age although Gallup.com shows that a recent survey revealed most consumers expect to retire at age 65. This is the reason why they work to save for their future need and they max out their contributions to their 410(k) to take advantage of employer-matching and even look at other IRA options to increase their nest egg.
  • Putting a college fund for the kids. This is one of the things that seems to be pulling a lot of college graduates down because they haven’t even enjoyed  their first pay, they already need to make payments. They now understand that their student loans seems to have a lien over their future salary. This is why for most parent, setting up a college fund for their kids is one of their financial targets to prevent their kids from experiencing what they had to go through.

Having a joint account when you get married is an important financial decision that you need to discuss and act on as soon as possible. The earlier you do it, the faster you can get started with your household budget and setting up automatic payments for your bills and loans.

5 Problem Areas With Your Budgeting Skills

Young couple calculates Finance at homeYour budgeting skills will play an important role in your bid to manage your finances on a daily basis. It is not an easy task to try and balance your household budget especially that there is no one formula that can work for all. This is because there are no two households alike with the same income and expense especially with the way they spend their money.

The debt that you might be in only makes budgeting harder as your obligations increase and your income stays flat. The Federalreserve.gov site shares how household debt went up by about 2.2% during the first three months of 20115. This might be a small percentage but it can already represent a significant amount on your budget.

It is not easy to juggle payments every month and there might even come a time that you feel that you are just working to pay the bills. You then start to question if all your worth is to meet financial obligations in life. And it does not change from student loans in college to credit cards and mortgage loan when you start working to college fund and retirement money when you get older.

If this is how you view your life than you need to step back and understand that you are not held victim by all these payments. You are using them to reach your goal whatever they maybe. If your dream is to have your own house then you might want to take out a mortgage loan or if you want your own car then you might have a car loan.

What you need to do is focus on your budgeting skills to help make your monthly expenses workable. If you are able to manage your budget better then you might be able to see where your money goes. If you get to see the progress you are making with the equity of your house or that you are a few more months away from fully paying your car then you see the fruits of your labor.

Making a budget work

Don’t be too hard on yourself when you are having a hard time getting your budget to work. Forbes.com shared that even Congress is having a hard time with their own budget. But that doesn’t mean that you can take it easy and just accept that you cannot make it work. Here are a few things you can look at to help with your budgeting skills,

  • Your budget is too farfetched. When you are making your budget, you need to be as realistic as possible and be true to yourself. This starts with the fact that your sources of income needs to be laid out with exact amounts and your expenses should be all accounted for. You need to start with these basics to give you the complete picture. This helps you put together a practical budget and prevents you from bloating your income level or even putting small expenses.
  • You are guess on your budget. You need to take a look at your past expenses to see how much you need to budget for a month. That is one of the most effective ways to manage your finances and plan for succeeding expenses. You can’t just pull a number out of thin air and put those amounts in. Take a look at past numbers and plot out your future expenses. Try to find ways how you can lower them down to be able to save some money at the end of the month.  
  • You need to study your budgets. If you are falling behind on payments and find yourself paying an increasing amount of fees and charges, you might not be reviewing and adjusting your monthly household budget. It is not enough that you have one month to month. If you are having problems making ends meet and you always have to make late payments, look at your budget and see where you can make adjustments. If your bills come ahead of your pay then check how you can move your due date. Check if you have enough money to make one month advance payment so you don’t send in late payments the next time around.
  • Expenses are too high. This is one of the most common reasons why people start to question their budgeting skills. It is often an overlooked item where a few tweaks can lead to huge savings. There are a lot of ways to lower expenses like taking on a frugal approach to spending. It can be cutting down on expensive meals with friends and instead having them over your house for dinner. It can also be as simple as monitoring your lights and water at home to lower down your monthly bill. Look at your expenses and if they are ruining your budget.
  • You see your budget as a mere suggestion. The bottomline is that you need to stick to your budget. It will serve no purpose if you put the numbers together but totally disregard it once you start buying and purchasing items. That grocery list will not be much of a use if you just keep it in your pocket and just add to your cart whatever you see and think is lacking at home. There is a big tendency that you might overspend and come home with more brown bags than you have planned and a bigger hole in your finances. Stick to your budget and if you overspend, track it down and make adjustments for next month’s expenses.

Working with your spouse

Your budgeting skills will amount to nothing if you do not find a way to work with your partner or spouse to integrate both of your income and expenses. You cannot live with two budgets under one household because if that is what you both want then it is useless that you are living together. Your teamwork will play a big role in your financial success.

  • Work together to create your budget. Huffingtonpost.com shared in a recent report that one of the most common stress factors in a household are disagreements with your spouse or partner when in comes to financial matters. You need to work with your spouse to collectively look at your income as well as your expenses in relation to your long-term financial goals. Many people who are outside looking in may only consider your income will double. They fail to realize that your expenses will almost double as well.
  • Agree on boundaries. It is a good idea to lay down ground rules early on so you both know how to manage each of your budgeting skills. One example is for you as a couple to agree on an amount where if the item you wish to buy gets to that level, both of you needs to talk about it first. You can also have small allowances each month that you can both use to your discretion. This is a good way to manage your money and keep both of you happy.
  • Have common financial goals. Your financial goals are what will guide you as a couple as you tweak and adjust your budget monthly. Those long term goals like buying a house or retiring at a certain age will help shape your financial attitude today. Agree on what you both want and work together and save together to reach those goals.

Your budgeting skills might need a little improvement but you need to remember that at the end of the day, it is all about your long term financial goals. Whatever amount you are saving now will go to either future use or paying off a debt. Those two goes hand in hand as one dictates the actions of the other.



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