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October 2018

The Importance of Personal Finance Management

The increase in consumerism today has made the common man or the average earner to spend more than what he used to. This resulted in more people getting in to debts and credit card scams. Many people today are suffering from huge loans that they have taken from the banks and are finding it difficult to pay them back.

This is where the key aspect of managing finance comes up. In today’s world, it is very important that you manage your personal finance very well to be successful. There are lots of benefits that can be earned if you take care of your personal finance.

Managing finance and finance availing goes together. Credits cards have increased in popularity and have become one of the best ways of spending and making payments. All the purchases go to the card holder’s account. And all the money that was spend by the credit card will be paid by the card holder to the bank at the end of a given time period. This is truly helpful in making transactions. You need to pay only once in a month or so.

But what happens with many of the card holders is that they do not pay the credits properly and they get into trouble. They get bankrupted. The finance managing software or tools that are available today are very helpful in maintaining the personal finance. You will be able to make a plan for spending and make more savings. This will definitely play a very important role in keeping your finance safe.

Get a Hold on Your Personal Finances

Before you can work on erasing your debt, you need a clear understanding of your financial situation. Here are the most important items to consider when assessing your finances.

Income versus Debt. Unfortunately, most people don’t realize how much they spend until they sit down and start counting everything. After only ten minutes of research, you should clearly see how much money is coming in and how much is going out. The numbers may be worse than you think, though recognizing the problem is the first step towards improving your finances. You may have reduce your spending on simple pleasures like dining out or going to the movies or, depending on the severity of your situation, remove them altogether.

Request credit histories. There are three agencies that run credit reports: Equifax (800-685-1111), Experian (888-397-3743) and TransUnion (800-888-4213). Contact all three and ask for your credit report. While the three are usually in the same ballpark, you may find one is much higher (or lower) than the others. It’s important to find out why and remedy the situation. Creidt reports are the most objective look at your finances; not only does it list what you owe, it shows who you owe to, whether you’ve exceeded your credit limits, and if you consistently pay your bills on time (which of course, you should!). Having low credit scores makes for higher interest payments on credit cards and, more importantly, mortgages.

Check out your FICO score. This is another way lenders assess your finances, and can be even more important than your credit histories. A FICO score is measured by your credit history, so its results should be similar to your three credit history reports. The score ranges from 300 to 850. If you are over 720, you are in great shape.

These are the three most important steps to determining your finances. Remember, in order to beat over spending, you must be aware of your income and debts, and learn to manage them appropriately. According to a study by The National Foundation for Credit Counseling, 41% of those who filed for bankruptcy cited poor management of their money. Take action today, and don’t become one of those 41%!

After years of struggling with debt and credit card problems, in 1999 we started studying and learning how to prevent debt. We’ve read hundreds of books, talked to multiple debt consolidators, and developed our own problem solving budgets.

The Basics of Managing Your Personal Debt

Uncontrolled personal debt can have disastrous consequences for the individual. Many people are finding out first-hand the paralyzing effects of personal debt gone wild. Personal bankruptcies are often times not the result of incurring debt but of poor debt management on the part of the borrower.

Proper personal debt management or reduction can help us avoid the problems of excessive payable amounts. There are actually some basic guidelines on handling your debts and staying afloat. These focus on keeping track of your finances, reducing your borrowings, and maximizing your income.

The key issue you need to consider first when trying to handle your debt situation is keeping track of your finances. In order to make the right decisions, you need to have access to timely, accurate, and relevant information on your financial state of affairs. In this regard, using widely available technology can work to your advantage. Online baking is among the tools you can have in debt management. Today’s banking system allows you to monitor your finances and transact online. In turn, this enables you to become as well-informed as possible and make decisions accordingly. Online banking also facilitates automated payments which helps you take care of monthly dues more conveniently.

Handling debt in manageable amounts is also important in debt management. Sometimes, the reason why many people fail to keep up with their obligations is that they have quite a lot of bills to worry about. Debt consolidation can be very helpful in simplifying such things. It involves combining several different debts into one or two larger pools that can be managed more easily. Combining various credit card payables and other bills into one consolidation loan can help you settle your debts more effectively than paying each bill one by one.

Now that you have kept track of your finances and reduced the number of bills to deal with, you now need to maximize whatever money you have or you’ll have. If you find it difficult or impossible to increase you monthly income, then you need to watch your expenses more closely. You need to find out which things you’re spending money on can stay or be removed from the budget. Additionally, it is always advisable to set some money aside for contingencies such as medical emergencies and so on.

Managing your debt can sometimes be as simple as following your common sense. The difficult part comes when self-discipline is needed. This is where most people fail when managing their debt. Liquidity and solvency are not impossible things to achieve. They just need your full effort and attention.