Half the Income But All the Bills
A TV commercial for a debt consolidation company aired recently where one woman told us that her work hours got cut in half, but she cannot pay half her bills. If you lost your income, they did not want you to use credit cards, but to consolidate your debts for a lower monthly payment. Emergencies come and go, but going into debt just by paying your bills on time will ruin your credit score. Credit cards should be used very sparingly, which means that you should not use them to pay your bills. If you were to go to a debt consolidation company, could you really get the same results as you could if you reduced your expenses.
Reduce Expenses
To pay your bills without credit cards, the first thing you need to look at is how much money you are spending every month. Complete and utter honesty must be used! Don’t forget about your entertainment and restaurant costs. Take a look at how much money you are over spending as well. Realistically, can you afford to keep that large house in that fancy neighborhood. Frivolous expenses must often be cut if you want a budget that balances well. If your house is eating up your budget in terms of a high monthly mortgage payment, it may be time to sell. If your car payment per month is double what you can afford, sell the car and get something cheaper.
Reducing your expenses should start with looking at how much house and car you can realistically afford. If a budget is balanced on paper, it will not work if you do not take action immediately. The steps you take now to lower your bills will ultimately be worth it later in life.
Debt Repayment Plan
With the massive credit card hikes that have been charged to many people lately, it is imperative that you pay off your credit card debt as soon as possible. Losing more money in the long term is common with a long term credit card balance. Smart budgeting makes a lot of sense if you have many debts to pay off. It could be a matter of time before you use your credit cards again, even after creating a debt repayment plan, so cut them up right now. Your credit score may actually get better without your credit cards. A sensible budget, if implemented, can allow you to live without credit cards. People usually get credit cards to handle emergencies. You must set aside at least eight months’ of income in a savings account for emergencies. Or, if you have a bit of time, you can apply for an emergency cash loan to get you through until your next payday.
Increase Your Income
No budget worth its salt is complete without a plan to increase your monthly income. How will you replace your lost income should your work hours be cut or you lose your job. Recession-proof businesses exist because others still are buying goods and services they cannot make or do themselves. Turn your hobbies into something that can help you replace your lost income. If you know how to plan parties or organize well, you may be able to earn extra money to fill the gap. Online writing can become a lucrative pursuit if you can explain difficult concepts. Take a general inventory of your skills and talents. Your skills may eventually land you into a new full time job, which could replace your income.
Smooth Sailing
After creating and implementing your sensible budget, you will wonder how you ever lived with credit card debt in the first place! It takes hard work to implement and live within a budget, but it can be done if you are serious about changing your finances. Smooth sailing budgets will help to cushion your income in the event you need an emergency cash loan!
