making the decision to add more debt,
you need to make sure that you:
sufficient money for your essentials.
only for items that you need and can
only if you're spending less each month
than you take home.
Start with your monthly take-home pay.
is the amount you have left after taxes
and other deductions have been made.
Subtract the amount you need for necessities
and fixed expenses.
includes savings, your mortgage or rent
payment, utilities, food, transportation,
child care, medical care, clothing, and
recreation. Include payments made on a
quarterly, semi-annual, or annual basis,
such insurance and taxes.
Subtract monthly payments for existing
loans and credit cards.
The balance is the amount you can safely
apply to debt repayment.
thinking you can spend all this amount,
since emergencies do occur, and you may
not wish to use your regular savings account
to cover small, unexpected expenses.
Take Home $ _______________
Fixed Expenses $ _______________
Loans/Credit Cards $ _______________
Amount Available For Additional Debt $
Moral of the Story: If youre
planning to buy a new house or car, pretend
you have already done so and start making
the payment but to yourself. Within
a few months, youll know whether
or not you can really afford it and youll
have some money set aside for repairs,
etc. when you actually do make the purchase.
If you cant make the pretend payment,
you certainly wont be able to make
the real one consistently. Time to go
back to the drawing board and figure out
what else youre willing to give
up in order to have the new debt.
to Manage Credit Card Use
Many people find themselves with credit
problems because they don't keep track
of purchases they make with their credit
cards. A simple method of keeping track
of monthly credit card charges is to:
the total amount you can responsibly
charge on all your credit card accounts
during that month.
track of your credit spending in the
same way you maintain a running balance
of your checking account.
each amount charged from the monthly
charge limit you set.
using your credit cards if you draw
this balance down to zero.
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