The cost of living is rising every year. Keeping on top of your family’s finances is difficult. Trying to balance your budget when funds are limited isn’t easy, so it’s important to make good decisions and avoid any decisions that will put you into a financial hole. If you’ve already gotten yourself and your family into a difficult financial situation it’s important that you don’t make the situation worse. Let’s look at a few different ways that families could make their financial situation worse so that you can avoid getting further into debt.
Ignoring Your Finances
I hope that you and your family never get into debt, but there are thousands of families in debt all over the U.S. and UK. As the situation gets worse, many people find themselves just ignoring the debt. When you get a lump in your stomach every time you look at your balances, it can become unbearable to even look at your bills. Ignoring your finances won’t make your debts and financial problems disappear. If you keep neglecting your finances you’ll just end up making your financial situation worse. So it’s important to keep track of your finances and avoid any late fees or missed payments.
If you can’t bear to look at your finances you might need to get a trusted friend or even a professional to help you look over your finances and develop a budget you feel you can live with. Some nonprofit organizations like Crown Financial Ministries offers financial counselling at a free or very discounted price. By working with someone who is qualified to help, you should be able to locate ways to cut your expenses and get back on track. Many people have found that once they decide to address the problem and work at it diligently they can get back on track in relatively short order.
Missing Payments
Many people that are struggling financially tend to pay their bills later than when the bill is due. It’s because they don’t have the money to pay on the due date, so they choose to just leave it and pay later. Missing payments will result in expensive late fees, making the situation much worse, so paying late must be avoided at all costs. As an extreme example, if you owe $25 on a credit card and pay it a single day late, the late fee may be another $25. So that one day has doubled your bill. Many people make the mistake of saying “well, it is ‘only’ $25” but when you are in debt every penny counts. Rather than looking at the amount, (or what it will buy, which seems like not very much) it is helpful to look at how long it takes to earn it. So even though $25 might only buy half a tank of gas, if you earn minimum wage it’s going to take you more than 4 hours to earn it when you take into consideration things like taxes, Social Security etc. Four hours is half a workday! So that one day late is going to cost you a half-day’s work! Now it doesn’t look like such a small amount does it? Always weigh purchases based on how long it takes you to earn it.
Spending More When You Ought to Spend Less
Most people get into debt because they spend more than they earn. So if you’re in debt it’s likely you fall into this category. When you’re in debt it’s best that you slow down your spending. Just like the first point of “ignoring your finances”, many people just keep spending money in denial. So to sum it up, to get out of debt you must spend less than you earn. Its common sense.
If you take the above advice and weigh your purchases against how long you have to work for them you will be less likely to waste money on worthless things.
Expensive Habits
Vices and habits like smoking, taking drugs, gambling or even being a shopaholic can be very expensive. How many hours do you have to work for that drink or pack of cigarettes? Often people turn to vices to avoid facing their problems, but these habits will not solve your family’s financial problems, they’ll just make your financial situation worse and cause new problems like poor health and strain your family relationships. So if your family is in a dire financial situation avoid creating more problems with these bad habits and vices.
See Also:
- Budget Building in a Spending World
- Preparing a Budget for UK Child Maintenance
- Tips on Eating Right on a Limited Budget
- Five ways to reducing monthly bills in the UK
- The Costs of Commuting
- How Much Should Your Family Emergency Fund Be?
- How to Make a Romantic Dinner on a Budget
Recommendations from Amazon:
- The Budget Kit: The Common Cents Money Management Workbook
- How to Make a Budget: Get Out of Debt and Start Saving More Money
- The Pocket Idiot’s Guide to Living on A Budget, 2nd Edition
- The Total Money Makeover: A Proven Plan for Financial Fitness By Dave Ramsey
- The Four-Week Financial Turnaround
Author Bio – This article was written by Frank Sexton on behalf of No Credit Check Loans.
Image courtesy of Jannoon028 / FreeDigitalPhotos.net