Don't be easily seduced by debt consolidation loans. The idea behind debt consolidation is that you take out one loan to cover all your debts. Paying only one loan in low monthly installments sounds like just what the debt doctor orderedbut this may well be the kind of thinking that got you into credit trouble in the first place. Lower monthly payments usually extend the loan over a longer period of time. Moreover, consolidating loans often frees up your credit cards, leading to even more debt.
Don't become a debt recidivist. If you're able to repair your credit yourself, the time will come (it may seem like an eternity) when you will return to a firmer financial footing. Many people, armed with generous credit card limits once again, lapse back into their old free-spending ways. It's the equivalent of successful dieters subsequently regaining all their lost weight. But keeping good financial habits will pay offand pay off big.
It's a lot easier to save when you know you'll get to keep the money, instead of feeling that it's all going toward paying off last year's binge. (If the cause of your debt problems was something beyond your control, you already know how |
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Insurance is possibly the least exciting subject in personal finance. Don't think of it as a necessary evil. Understand it for what it is your protection against catastrophic loss.
Get insurance coverage for your business, even your part-time business.
Many homeowners insurance policies exclude liability coverage for any activity that earns any amount of money, no matter how small. Trying to reduce your insurance bill, by pretending you're not earning money in your small home-based business, will likely fail. Don't get left without liability coverage. Many businesses can get adequate coverage for a lower premium than you might expect. Ask your insurance provider for information on the type of coverage appropriate to your business.
Beware of day-care providers paid under the table.
If your day-care provider is paid without a paper trail, chances are the provider is not properly insured in case your child gets injured. Remember, many homeowners insurance policies don't cover activity that produces any income, no matter how small. Expecting your day-care provider to be able to fool the insurance company is courting disaster. You don't want to risk having no money available to cover costs for potentially crippling injuries to your child because of an uninsured day-care provider.
To verify the |
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Figure out how much you can save each month to pay down credit card and other loans. Don't be overly ambitious in setting a target. It's better to come up with an amount that you know you can comfortably afford rather than set a target that will be discouragingly difficult to achieve.
Depending on how much you owe on the cards, plan to put 50 percent to 75 percent of your monthly savings against the loans. The more debt you have, the more you should be putting toward reducing the loans. One thing you want to avoid is simply making the minimum required payments each month. If you pay just the minimum, you'll probably be in a nursing home before you pay off the cards. By the way, I hope I don't need to remind you that you should make only minimum use of these cards, lest you continue adding to the outstanding balances.
Your "extra money" should be first put into a savings account at your bank or credit union in order to build up a small cushion for any financial emergency that might arise. At a minimum, this cushion should be enough to pay a couple of months' worth of |
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