My mother wasn’t big on proverbs when I was growing up, but there was one lesson she was determined to pound into my head using one short phrase…and it stuck and has silently guided me through countless decisions with what to do with my limited funds. That one phrase continues to echo in my mind when I pull out my check book, prepare to swipe my credit card, or just lay down cold hard cash. What seven words could have such an enduring impact on my spending habits, you ask…? I can hear the voice of my mother as clearly now as I did the first time she imparted this pearl of wisdom to me…A fool and her money are soon parted…
I had no intention of being that fool, so through trial and a good bit of error I slowly figured out how to avoid being foolhardy and broke, and I’d like to begin by sharing these tips with you.
First things first: assess your current financial status by taking a close look at what you earn, actual take home pay, versus what you owe. Don’t omit any financial obligation--- rent, utilities, transportation, credit cards---everything must be listed. Don’t hide anything because you’ll only be hiding it from yourself and effectively sabotaging your road to financial health and freedom…Now dry your tears and let’s get down to the real work.
Get a free copy of your credit report at https://www.annualcreditreport.com or by calling 1-877-322-8228. This website will allow request a free credit report from each of the three nationwide consumer credit reporting agencies, Experian, Equifax, and TransUnion, each year. Be smart about it and see your credit report once every four months by scheduling your requests one at a time instead of getting all three at once. To do this, simply request a report from Experian in January, Equifax in May, and TransUnion in September (you get the idea) each year to successfully track any discrepancies and monitor your credit.
Now that you have your credit report, review it carefully to ensure your personal information is accurate. Look for any fraudulent activities whereby someone may have obtained a credit card using your information. Your report will also reveal payment history and any adverse reporting from creditors. What’s so great about good credit, you ask? The better your credit is, the easier it is for you to obtain a loan with a decent interest rate. This is especially important when looking to purchase a home or a vehicle. Your credit rating could also affect the amount you pay for insurance premiums.
Verifying the accuracy of your credit report should lead you to the next important step: taking control of your credit cards. Start by listing each card with its balance and the interest rate you’re charged for each one. Pay off cards with really low balances instead of paying the minimum monthly amount. As you pay off the lower balances, apply that payment to your card with the highest interest rate. Always, always, always pay more than the minimum required payment in order to free yourself from giving credit card companies your hard earned resources through excessive interest rates.
If you’re finding it hard to make ends meet, take a close look at your spending habits. Now may be the time to forego some luxuries disguised as necessities. You may have to scale back on entertainment, dining out (even for lunch), hair and nail appointments, new clothes and shoes (you get the idea) until you get your spending under control. Eliminating credit card debt is the best way to build your savings, because instead of paying Sears, you can start paying yourself. In the next issue, we’ll talk about building a nest egg.
Written By Sylivia Dickerson
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