Leon Partridge writes for Coin Collecting where you can find information on vintage and rare coins and chat with other members via the online forum.
Immediately following the season of giving is the season of paying, and if you’re like most people, you have probably racked up a bit of debt in your quest to make the holidays special for family and friends. So rather than finding yourself in the same boat a year from now, why not set aside the resolutions to lose weight (you know that only lasts about five minutes), clean the garage, plant a garden, and so on, and instead commit to setting a budget that will give you the money you need to pay off debt, keep up with bills, and save a little extra to hire a cleaning crew and gardeners (and still have some money left for next year’s holiday season)? If you often find yourself in financial straits, now is the time to crack down on your budget and get to saving, for real. But how do you get started?
Budgeting is easier said than done.
It’s not hard to figure out what you’re bringing in versus what’s going out. Income and expenditures are finite numbers, after all. But finding ways to make the two equal (or have more coming in than going out) is not so simple. You may discover, when you sit down to plan your budget, that you are, in fact, spending more money than you make. With credit playing such a huge role in modern life, this is a pretty common state of affairs. However, there’s no reason to succumb to despair and throw in the towel just yet. You just need a little help to get back on track.
For starters, you should shred extraneous credit cards and limit yourself to one (that has the lowest interest rate).
From there, you would be well served to look into a debt consolidation loan. A bank can usually offer you a rate that is far lower than whatever you’re paying the credit card companies. Once your cards are paid, you can cancel the accounts and then simply pay off the loan (saving yourself not only on monthly payments, but also on what is owed in total). If you’re so far gone that collection agencies have become involved, you may be able to avoid black marks on your credit by offering to pay a reduced amount. Most companies are willing to work with you if it means they can recoup at least the principal cost of what is owed (even if they can’t get all the interest).
The real trick lies in maintaining your budget once you have it planned.
Paying off creditors is one thing, but what’s to stop you from immediately spiraling back into debt? This will require an amount of planning and commitment on your part. You’re probably going to have to cut back in order to live within your means. “Entertainment” expenses are usually the first to go (dining out, movie dates, unnecessary clothing, etc.). But you can also cut back on monthly expenses by paying down a car loan, getting a package that includes phone, internet, and cable (instead of paying more by having three separate bills), and working to conserve energy in your home, just for example. And if you have a real spending problem, you may need to seek professional help to conquer it.
In short, you simply need to pinpoint problem areas and find ways to counteract them if you want to stick to a budget. Resolving to do this in the coming year will ensure that at this time next year, you’ll be well ahead of where you currently find yourself in regards to your financial situation.