Stringing a Credit Safety Net: Part Two

In the last article the benefits of staying on top of your credit were discussed. The importance of knowing your credit history, and of preparing for financial hard times was highlighted. In this article we will cover spending practices. There are two actions you can take in order to keep yourself out of financial trouble, and they both involve something that many people hate to think about: budgeting.

The "B" Word

1. Budgeting: So many people think of the word "budget" and immediately groan. They think "Oh, that's only for people who can't afford the things they need" or "I don't need to budget, I make plenty of money". Not true. A budget can help anybody make more out of their money. Any stigma you feel attached to the word is in your own head. Let it go. Feelings of embarrassment can only constrain you. Budgeting provides you with lots of information. If you were to watch your finances for a month or two, you might find out a lot that you didn't know. You might find that you're spending loads of money on eating out, but that you're not saving anything at all at the end of the month. You might find that stopping for that extra-tall, double-shot, no-whip soy latte five days a week is costing you $100 a month! And you've been wondering why you can't get a jump on that credit card bill. Budgeting is not a method of tricking yourself into spending more money. It's an active choice that requires self-control and dedication. But as all things that require hard work, budgeting is well worth it in the end. You may miss the smell of that coffeehouse in the morning, but the lack of stress when it comes to bill time will be well worth it.

Paying Bills: A Strategy

2. Strategic bill paying: If you know that you're going to be cutting it close for a couple of months, you'll want to come up with a strategy to pay your bills. If you know that you're only going to be able to pay either your credit card bill or your rent bill, choose wisely. A credit card company might be willing to cut you a break that a landlord will not. And which would be worse, finding yourself in extra credit card debt, or finding yourself without a place to live? You also might find yourself in a situation where your paycheck will cover your bills, but right away. In this situation, you should find out what dates your payments are due. If they are staggered throughout the month, you can pay them off in order and avoid any late fees or additional debt. You may be broke at the end of the month, but at least you'll avoid going into the red. In the next article, we'll discuss ways of avoiding some of the temptations that come with owning credit cards: benefits and discount programs, and making only minimum payments.