|
Everyone is all about
makeovers these days—from extreme personal makeovers to
extreme home makeovers. Perhaps we also should consider
a financial makeover, before it gets to be extreme. Here
are some simple suggestions for your financial makeover.
Develop a Plan
It is much easier to focus on a goal if you can see it.
Develop a written plan to rid yourself of debt and focus
on what it will take to attain that goal. To get a true
perspective of your financial situation, list all of
your assets—everything you own. Then list all of your
debts—what you owe. When you subtract your debts from
your assets, then you will see your net worth. Now make
a list of all of your sources of income to determine
your cash flow. List all of your expenses, such as
mortgage, car, food and credit card expenses. Subtract
your expenses from income and you will come up with your
positive or negative cash flow. If you have a negative
cash flow, it is definitely time for a financial
makeover.
Develop a Budget
This will allow you to better understand where your
money goes each month. Track your spending habits by
keeping a daily log of all of your expenditures. At the
end of the month, you may be surprised to see how much
money you could save.
Implement Your Plan
Begin your makeover by reviewing your credit report and
your credit score at least once a year. Under federal
law, you’re entitled to one free credit report on an
annual basis. To learn more, log on to
www.AnnualCreditReport.com or call 1-877-322-8228.
Many people wait until they need to make a major
purchase before paying attention to their credit report
and score and could be shocked at their low rating. If
you find an error in you report, fix it immediately.
Be sure to reconcile
your bank and credit card statements each month for
accuracy. And while debit cards have made our lives
easier, be sure to enter all debit card transactions
into your check register. Failure to do so could result
in overdraft charges and fees and a major hit to your
carefully crafted budget.
 |
Use Credit Cards Wisely
Credit cards, when used wisely, are a valuable and
convenient tool for money management and dealing with
unexpected circumstances. It is, however, imperative
that you fully understand the terms and conditions of
any credit card agreement and ensure that you abide by
“the rules” to avoid additional costs.
If you think one of the myriad
“pre-approval” credit card offers you receive daily in
the mail is the answer to your financial makeover, think
again. While these “low interest rate” offers may at
first glance seem an attractive way to consolidate and
pay off your debt, you may find that after six months,
the honeymoon is over, your interest rate has doubled or
tripled and your financial situation is even worse.
Late fees for overdue credit card
payments have increased in recent years and you may be
liable for a late fee for being one day late in making
your payment. You could also face a major hike in your
interest rate and find your credit score lowered. All of
this could make it more difficult to get a new loan, job
or insurance.
If you dedicate a certain amount of
money each month to credit card payments, be sure you
make a larger payment to the card with the highest
interest rate in order to pay it off more quickly.
Again, be responsible and
knowledgeable with your credit cards.
Personal makeovers don’t happen
overnight and neither will your financial makeover.
However, it is a goal that is worth working toward in
order to secure your financial future.
CONSUMER TIPS is provided as a public
service by the Missouri Independent Bankers Association
AND
Community Bank of the Ozarks
P.O. Box 43
Sunrise Beach, MO 65079
(573) 374-5245
1-800-927-4314
www.cbobanker.com
|
