Monday, June 22, 2009

Preventing Credit Card Mess

Credit card debts problem is extremely common today. It is usually the first mark of longer term financial troubles. How to manage your credit cards so that you will never fall into credit card mess? There are four pillars in preventing credit card debts problem.

First pillar: Proper credit cards administration

One of the best patterns in managing your credit cards is to segregate your credit card disbursals into three credit cards based on your disbursement pattern. The first credit card should be used for such as fixed payments like utilities, subscriptions, insurance, memberships, etc. The second credit card should be kept for twenty-four hours to twenty-four hours disbursals like shopping, eating out at restaurants, groceries, petrol, etc. The 3rd credit card is for emergency cases.

Every calendar month you need to unclutter the full balances of three credit cards. You should not just pay any amount above the minimum requirement. The minute you go forth a small balance, it adds up to the adjacent month’s balance. Remember that this is a preventative action plan.

Put the second credit card away if in any calendar month you are not able to unclutter the full balances of three credit cards. Stop using the second card until you manage to pay off the full balances of your cards in one month. You will have got to pay cash for purchase made during the month. Don’t usage your 3rd credit card, it is for emergency cases only.

If you are still not able to unclutter the full balances of your credit cards every calendar month even after you have got set your second card away, you should then reexamine your monthly fixed payments that are charged to your first credit card. Some disbursals may not be important for quality living.

Second pillar: Budget, the magic number

You just need to cognize how much you can charge to your second credit card in a month. You really don’t have got to take out your spreadsheets or accounting software unless you enjoy using them. The computation should be simple and straightforward. The magic number is your return home network wage less your monthly fixed expenses, i.e. repayment of home loan, insurance, memberships, school fees, etc. This magic number makes not demo how much you can pass but it bespeaks your monthly disbursement limit. It is a grade to guarantee that you are able to pay off your full three credit cards balances in one month. Keep the magic number in head every clip you charge an disbursal to your second credit card.

You must have got a repayment program in head for large points like renovations, furniture, overseas vacations, etc., before charging the disbursals to your second credit card. Bash you have got fixed sedimentations elsewhere to pay off the credit card debts? Are you prepared to sell your shares to unclutter the balances? Rich Person you arranged other borrowings to pay off the credit cards debts? If you don’t have got the financial resources or other funding means, make not pass on such as large items. It is the start of your financial troubles. You must retrieve that credit card debt is the most expensive consumer debt that you can get yourself into.

Third pillar: A different mindset

Live now.

"Live today" is not equal to "spend today". Mass mass media propagates the virtuousness of disbursement by equating it with "live now". "Carpe diem and you buy" is the message that drives a generation of debt-ridden in-between class. The core of the action is to better your disbursement effectivity in bringing satisfaction. If you need to pass a batch in order to elevate your felicity or satisfaction to the degree of an average person, you are highly ineffective. Find good things in life that necessitate small spending. Live now, not pass now.

Practise cunctation in purchasing things. After a piece when you chill down it probably doesn’t look to matter whether you have it or not.

Fourth pillar: Quality lifestyles

Focus on quality of life and not on spending. Check your credit card statements and place your slayer disbursement habits. Find quality alternatives. The best java I had was not from java parallel bars like Starbucks, Strudels, etc. but from a small air-conditioned Indian restaurant. The java is called Bru Coffee. If a trip to Tokio is too expensive, why not see Sydney or Hong Kong? Spend clip reading with your children instead of partying all night.

If there are stuff things in life that you couldn't make without, even if it intends being not able to pay off your cards this calendar month or for the adjacent few months, you will get into credit card problems sooner or later.

Income degree have got nil to make with debts problem. There are too many bankrupt high earners around for us to cognize this. It is about how you handle your money, as simple as this.

Practice the four pillars and allow credit card problems be a thing of the past.

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