by Michael J Brazier,
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on the net: http://www.freedomdm.org/
UNITED STATES, Jul 14 — In these difficult economic times, the middle class is being squeezed more than ever. As unemployment continues to rise the future is not exactly bright. That is why everyone should be trying to increase their savings while trying to reduce their spending. If you are burdened with considerable credit card debt, they have programs that can get your interest rates back into single, fixed digits and are designed to have you out of debt in five years or less
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n these difficult economic times, the middle class is being squeezed more than ever. As unemployment continues to rise the future is not exactly bright. That is why everyone should be trying to increase their savings while trying to reduce their spending. No matter how solid you may think your employment is, in today’s economy and for the foreseeable future nobody is guaranteed employment. Even the once sacred government job is no longer secure. Municipalities, counties, and states are all experiencing budget crunches and in some communities even police have been laid off. Let’s not even talk about the federal governments problems.
So you want to save more but are currently barely making ends meet. The first step to improving your financial situation is to develop a household budget. One starts by analyzing their current spending habits. The best way to get your arms around this is to use your debit card for everything you purchase for one month. You now have a record of where the month’s income went. If you don’t have the debit card or don’t like the idea, you can start by sitting down and listing all your monthly bills, then estimate what you spend on food, entertainment, maintaining your living space and vehicle, etc. The challenge is to actually record these expenditures for a month as most people tend to underestimate their actual spending. The bottom line is we all need to develop a household budget or spending plan and review its accuracy in order to effect any change in our financial circumstances.
This process can be greatly simplified by contacting a certified credit counselor at a non-profit credit counseling organization, as they should be willing to help you through this process at no-charge to you.
The next step is to review your assets and liabilities. Assets are what you own, house, car, clothes, and other personal property. Liabilities are what you owe to others. For instance, in the asset column, you’ll list your vehicle at its current value. In the liability column you will list what you have left to pay on your vehicle loan. If the amount you owe is less than the value of the car it is a net asset. If it is the other way, you owe more than it is worth; it ends up in the net liability column. The same is true or your house or anything else that you have financed. The difference between one’s assets and their liabilities is one’s Net Worth. If this is a negative number it means you owe more on your assets than they are worth.
Now that you have an accurate assessment of what your current financial picture looks like, you can set goals and use budgeting as a way to achieve them.
For many younger adults the goal of Home-ownership is common, with the most common roadblock to achieving it being their credit situation. For the past twenty years Americans have enjoyed “loose credit” but at a price. (Interest rates on credit cards for most have climbed into double digits, with the average approaching 20% APR’s. In round numbers, if you are carrying $10,000 in credit card debt, it is likely to be costing you over $2,000 per year just in finance charges.
This is where a non-profit credit-counseling organization can really help. After going through your financial analysis with your counselor, they will discuss your financial goals with you and help you develop that spending plan to achieve them. If you are burdened with considerable credit card debt, they have programs that can get your interest rates back into single, fixed digits and are designed to have you out of debt in five years or less.
For the potential home buyer that has a high debt to income ratio these programs can help you get into a house years earlier than going it alone and paying those high interest rates.
References
No matter how solid you may think your employment is, in today’s economy nobody is guaranteed employment. That is why everyone should be trying to improve credit and increase their savings while trying to reduce their spending.
Communicate directly with Michael J Brazier, the author of this article. Ask questions, send suggestions, comments, engage in conversation, or perhaps you would like to submit a project.
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