Handling Your Money When You Are Poor

Prioritize your bills, increase your income, and make a new budget. Things will be better before you know it.

If you are broke, how do you manage your money?

Budgeting money is seldom simple, but when you don’t have sufficient money to cover your monthly bills, it’s particularly tough. You may be between jobs, have a low-paying job, or be so short on money that you cannot cover all of your expenses. Regardless of the cause, you must alter how you spend your money if you’re so short on cash.

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Here are the steps for effective money management when you are broke:

It’s best to take action before the debt collectors start hunting you down. They aren’t known for their compassion, and they only get paid when you pay them. You can see where their priorities lie by their only getting paid when you pay them.

It’s important to inform your creditors as soon as you realise you can’t afford a payment. You may be able to get a longer payment deadline or lower payments for a while.

Prioritization is the key to living. You must allocate your limited resources appropriately. The priority order for paying your expenses is typically mortgage, utilities, insurance, and food. Credit cards are nearly always the last payment.

Rather than simply ignoring the bills, think about the ramifications of not paying them and make a decision.

After you have contacted your creditors, you should take this step. Your choices might be different depending on their responses. Now is the time to mercilessly eliminate all of your unnecessary expenditures. Austerity has its time and place, and now is the time.

You must reduce your savings plan. It may be the one time to cease saving a portion of your salary. The repercussions and expenses of not paying your bills may be so severe that you cannot reduce your savings payment any further to make up for it.

It’s always good to pay yourself first, but it isn’t always the right thing to do.

It is a bad idea to use credit cards as a substitute for a paycheck when cash is short. The interest on this money can be extremely high, and it is hard to get rid of this debt later on. Avoid the trap of thinking that credit is a suitable solution.

Normally, you can save a lot. Consider how long it would take to eliminate this new debt in addition to the debt you currently have, which is more than you can handle. It is not logical to pile even more onto an overloaded situation.

It is advisable to attempt to generate additional revenue if you are unemployed. If you have items cluttering up your home that you do not require, you may want to consider selling them. If you have a job, you might want to seek extra hours or take on a second job.

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It is easier to catch up if you don’t fall behind now.

It is time to establish a new budget, whether your financial circumstances have altered or your current budget has failed. If you agree, you must create a new budget immediately. Look at your income and bills, and make some intelligent choices. Remember that prioritizing intelligently is all about prioritizing intelligently.

It’s easy to give in to your worries and sit idle right now, but don’t make things harder for yourself in the future.

Focus all your attention and energy on finding solutions to your money problems. You will be astonished by how much you can accomplish when you take a deep breath and focus your intention and energy on solutions.

Make a new budget and prioritise your bills in order to increase your income. Things will get better before you know it.

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A Simple Plan to Regain Financial Fitness

Most of us are not financially fit. We are not completely aware of how our money is being spent. We have too much debt and spend money on the wrong things. While it can be challenging to turn things around, it’s well within your reach.

There is no single, correct path to financial prosperity. Different solutions work for different people.

While there are multiple paths, there are some steps that are critical, regardless of the path followed:

1. Know where your money is being spent. Many people only have a vague idea about how much money they make and where it goes. The first step to financial fitness is know exactly how much you’re taking home and where it’s being spent.

·       Websites such as Mint.com make it easy to track how every penny is being spent each month. There are other similar services as well.

2. Set short-term and long-term goals. Set a few goals that will cover the next month, year, and five years. How are you going to make these goals come to fruition?

3. Allocate your spending wisely. A few simple guidelines will help you to regain your financial fitness. If you’re already in a good place financially, these guidelines will help you to stay there:

·       Keep your fixed expenses to 50% or less of your take-home pay. This includes things like rent or mortgage payments, utilities, car payments, gas, and food. Basically, the things you must spend money on each month.

·       Use 20% of your take-home pay to build an emergency fund, pay off your debt, and to save for your retirement. It is recommended that your emergency fund be able to cover your fixed expenses for 6-9 months. How the money is split between your retirement, debt, and emergency fund will depend on your situation.

·       The remaining 30% can be used as you see fit. This is the money you can spend on vacations, eating out, or hiring a landscaper. This money can also be put towards the previous category, but be sure to enjoy your life along the way.

4. Eliminate your debt. Debt is the most insidious obstacle to your financial fitness.

·       Be aware of your credit score. There’s no need to ever pay to get your credit score. There are many free options available, like CreditKarma.com. Lenders are obsessed with your credit score. You should be even more obsessed.

·       Be careful with your credit cards. It’s always best to be cautious about whipping out the credit card. If you don’t have the money in your bank account, it’s important to think about how critical this purchase really is.

5. Get adequate insurance. What could be worse than finally getting back into good financial shape, only to have it all wiped out by an illness or house fire? Protect your assets and limit your liability.

Reaching a point of financial fitness is a worthy objective. Not only does it give you the opportunity to relax and enjoy your life, it also makes your future much more secure. Allocating your funds properly helps to ensure that you have enough.

Have financial goals and protect your assets. While insurance feels like a painful expense, it really is necessary. A single disaster could be financially ruinous. Get started today and become financially fit.

7 Things That Will Destroy Your Credit Score

Your credit score not only determines whether or not you can get a credit card, mortgage, or auto loan, it’s also a critical factor in determining the interest rate you have attached to those items. A low credit score can cost a lot of money over your lifetime.

Not everyone is aware of the many factors that determine a credit score. It’s easy to make assumptions that seem logical, but are actually false. Acting on incorrect beliefs is a sure way to make a critical mistake.

Save money and make your financial life easier by avoiding these seven credit destroyers:

1. Carrying a big balance on your credit cards. While having a lot of debt is never a good idea, using more than 30% of the available credit on your credit cards hurts your credit score.

·       For example, if your credit limit is $10,000, your score drops if your balance is over $3,000. This is commonly referred to as the “utilization ratio.” Keep yours under 30%.

2. Paying late is a huge factor in your credit score. Experts estimate that 35% of your credit score is determined by your payment history. Any late payments will lower your score.

3. Closing credit cards is a credit score killer. This is related to your utilization ratio. By closing a credit card, you lower the amount of credit that’s available to you. Your credit score is also sensitive to the length of your credit history.

4. Defaulting is an obvious credit score mistake. When you fail to pay back a loan you owe to a lender, you can lose as much as 100 points from your credit score. Make every effort to pay back your loans.

·       If you’re struggling, contact the lender and attempt to make other arrangements. They can be very flexible if failing to do so means not getting their payments.

5. Applying for too much credit. Everyone needs to have some credit, but applying for too much has a negative effect on your score.

·       Each time you apply for more credit, your potential lender makes an inquiry of your credit history.

·       Each of those inquiries lowers your credit score.

·       Avoid sending in every credit card offer that shows up in your mailbox.

6. Not having a credit card at all. Many people are getting rid of their credit cards in an effort to avoid debt. Unfortunately, this does nothing to help your credit score.

·       Experts believe that the ideal credit score includes 2-3 credit cards. Credit diversity can account for as much as 10% of your credit score.

·       Credit cards help to keep your credit history current.

7. Co-signing for someone else can be a mistake. Putting your credit on the line by co-signing for someone else is a huge risk. Their failure to stay current with the payments can destroy your credit score.

·       You’re equally responsible for that debt, so any late payments or defaults will show up on your own credit report.

·       You can even be subject to collections and lawsuits. If a lender won’t do business with them, you might want to reconsider before co-signing.

By simply avoiding these common mistakes, you can’t help but have a great score that will guarantee you the lowest interest rates, even if your credit score is poor now. It may take time to boost your credit score, but it’s definitely possible.

Give your credit score the amount of attention it deserves. It makes life a lot easier!