Managing Your Money

How many times have you wished you could save money or invest in the stock market?

When you receive your paycheck, do you feel that you are working only for your creditors?

Many young professionals, deluged with offers of easy credit, face large debts within a few years of completing their educating. Establishing a personal financial strategy is one sure way to get out, and stay out of the credit rut. Your aim is to both reduce your debt and to control your spending. It makes no sense to pay off your creditors, only to rack up debts again.

Sit down and examine your finances in detail.

You are trying to determine one thing: are you spending more than you make?

If you are, you are heading towards bankruptcy. Deal with your credit first. Look at your credit report. Figure out your credit patterns. The long-term debt, paid over several years, is usually for education, a home or a new car. The short-term debt (credit cards) is for personal expenses. Credit card debt is dangerous over the long-term. The interest is high (12-20%) and if unpaid, can destroy any other financial plans you have. 

Taking Control

The following tips will help you take and maintain control of your finances:

  • Pay off your short-term debts. This includes credit cards, and friends and parents as well anything and anyone that you can rely upon for short-term credit in a pinch. 
  • Set up a budget. Although many people do not have the patience for tracking every dollar, you should keep track of your finances. 
  • Quicken and Microsoft Money software can help track your spending and banking. Examine your spending. Are there practical ways to get what you need at a lower price? Mail order saves on local and state taxes, but includes shipping charges. Planning purchases and price comparisons saves money. A sale is good when it is for an item that you need, and when you can afford it. If you invest in brand-name products, make sure the extra expense ensures higher quality. 
  • Pick your bad habits. Smoking and gambling are very easy ways to damage your finances. One pack of cigarettes a day at $2.00 equals $730.00 a year. Everyone has vices, but some a cheaper than others. Save 10 percent of every paycheck. With an after-tax salary of $30,000.00, you will save $3,000.00 every year. 
  • Enroll in a health insurance plan. This is often expensive, but critical should you become sick. Without insurance, medical bills could bankrupt you. 
  • Credit cards should be used only for emergencies, not for daily expenses. Buying a new pair of jeans if fine. However, paying interest on them two ears later is not. Use cash, checks and debit cards. A debit card takes money directly from your checking account, and is accepted like a credit card for goods and services. 
  • Keep your long-term debt under control. Rent or house payments should not prevent savings or force credit card spending for expenses. Do not co-sign loans for anyone. If they fail to meet their payments, the burden of repayment falls on you. Subsequently, the added burden of another's debt will affect your good credit. 

Now that we have established a few guidelines to help you get started, you can now set up your own strategies for successfully managing your finances. This will take time and effort, however, once done: your spending will be under control you will be saving money you will be free from short-term, high interest debt, and most importantly you will be ahead of most Americans, who for the most part, do not manage their finances very well.

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