Take Control Of Your Finances


Sometimes, your bills increase when your income doesn't. It's a difficult situation that can quickly lead to big trouble. Read over the following list; if two or more of these statements apply to you, it's time to take a serious look at how you manage finances:


  • My required monthly minimum payments are 20 percent or more of my take-home pay, not including rent or mortgage payments
  • I use cash advances from one credit card to pay off another
  • I pay only the minimum due or less each month
  • I don't know how much my total debt is
  • I'm getting calls or letters from creditors about overdue payments
  • I often pay bills late
  • I've recently been denied credit
  • My income isn't enough to pay all my current bills
  • I have more than three credit cards and I'm using all of them
  • I was turned down for a purchase because my credit card was over the limit
  • I have to use credit cards to pay for things I used to pay for with cash
  • I have at least three credit cards and I am still applying for more


If you need help with your budget, follow the planning and budgeting steps on this site. They can help you manage finances and take control. You may need a few months to adjust your spending categories until you have the plan that works best for you.


Getting Spending Under Control


If your income doesn't cover your expenses, you should either cut your expenses or increase your income. It's usually easier to cut spending.  You don't need to make drastic changes; just make effective cuts that will allow you to pay your bills. First, cover the bills you must pay (mortgage/rent, utilities, loan payments) and money for necessities (food, insurance). Then, focus on cutting non-essential expenses such as eating out, shopping and entertainment.


Getting out of debt is not easy. It also takes time. Most people need a year or two to accomplish their goals.. But it's well worth the commitment.. Remember, the discipline and techniques you learn by balancing your budget will benefit you for the rest of your life. Getting out of debt feels great. Staying out feels even better.


Once your monthly spending is under control, you can think about ways to make debt a thing of the past. Here's a list of ideas:

  • Each month, try to reduce a different spending category by 5-10 percent
  • Start a savings account for large, infrequent expenses so they won't jeopardize your budget
  • Charge items only if you can afford to pay for them now - especially large purchases
  • Treat a credit card balance like you'd treat a bank loan for the same amount
  • Avoid the "sale" mentality. When you buy a $100 item on sale for $60, you don't save $40. You spend $60. It's only a deal if you need it and can afford it.
  • Try to increase your income. Can you improve your salary? Is a second job possible?
  • Reward yourself. Working your way out of debt can take time and effort.  It's also a big accomplishment. Find inexpensive ways to celebrate your progress - spend a day in the park, bake yourself a cake or treat yourself to a new CD or book.


Additional Resources


National Foundation for Credit Counseling's DebtAdvice.org helps consumers understand the use of credit and to locate a trained, certified counselor for credit assistance. For a list of U.S. Government-approved credit counseling agencies, visit www.justice.gov.

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