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Finance: Decrease Spending
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In the current economic climate, what’s the most important thing that people can do to decrease their spending and stay on track with their finances?

iStock_000006413338XSmallOne of the most helpful actions you can take to decrease your spending is to track it for at least a month. For one solid month, write down every purchase you make—down to the cent. When I say every purchase, I mean every purchase. You’ll need to track every night out, every coffee, every taxicab ride, etc. Once you’ve tracked your spending for a month you’ll really be able to see where your money is going, and where you can cut back.

Going hand in hand with tracking your spending is creating a budget. By creating a budget you’re helping to ensure that you won’t fall victim to overspending. To create a budget, you’re going to need two numbers: First you need to know how much you’re bringing in monthly. This should include your take-home pay and any other source of income you may have. Do you have an income that fluctuates from month to month? If so, find an average for the last year. Second, you’ll need the amount you came up with when you tracked your spending for a month.

Once you have these two numbers, you’re ready to budget. Here’s what the breakdown of your spending should look like:

  • Housing: 35%
    Housing includes your mortgage, rent, maintenance, taxes, utilities and insurance.
  • Debt: 15%
    Debt is anything you have to pay back: credit cards, personal loans, student loans, etc.
  • Transportation: 15%
    Transportation includes gas, car insurance, car repairs, car payments, parking expenses, tolls and train or bus tickets.
  • Savings: 10%
    This is the money you’re setting aside for retirement, college, emergencies or other goals
  • Other living expenses: 25%
    These are everything else, groceries, healthcare, nights out, vacations, clothing, entertainment, gifts, etc.

Are some of your expenses costing you more than the appropriate percentage? If so, you’re going to need to do some tweaking. While many expenses are fixed (your mortgage, your car payment etc.) you can likely cut back on expenses that fall under the “other living expenses” category. Take a look back through your notes from the month when you tracked your spending to come up with a budget that keeps you financially stable.

Jean Chatzky, SCORE Guest Blogger
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Finance: Credit…Why Is It So Important?
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Credit Tips to Get Ahead

In these tough economic times and at a time when banks are not lending as freely as they have in the past.  Good credit needs to be a priority. Look at your credit report regularly, question mistakes or unknown information.

You are entitled to a free credit report one time a year.  This is the only free report. www.annualcreditreport.com or call 1-877-322-8228    You will not get your credit score but you will be able to see what is on your credit report and see any outstanding debts that you may have.  For your credit score there is an additional charge.  You can go to www.fico.com for your credit score.

Valuable Tips:  ALWAYS

  • Pay your bills on time
  • Pay off collection accounts
  • If you have a credit problem contact the creditor…do not ignore the problem, negotiate and resolve it.
  • Pay off debt, do not move it around
  • Do not close unused credit cards. Keep them open with a $0 balance.
  • Always pay the highest interest rate credit cards first and always pay more than the minimum. Make payments on the others with the lower interest rates.

On credit cards: Note how many credit cards you have, any annual fees, what interest rate you are paying and any outstanding balances.

If you have a problem with your credit and need help, go to a non-profit agency. These are the only legitimate agencies that can help.

Contact:

  • National Foundation for Credit Counseling
    Web: www.nfcc.org
    Phone: 1-800-388-2227
  • American Consumer Credit Counseling
    Web:  www.consumercredit.com
    Phone: 1-800-769-3571

Your credit report is your report card of how you pay your bills if your bills are paid late everyone will know.  Remember with a high credit score you will be able to get a loan at a lower rate.    Also note if you are ever denied credit you can request a copy of your credit report from the company who declined you, free of charge.   Credit is the most important indicator of your character that needs to be maintained.  Your credit shows that you pay your bills.

Julie Brander - Business Mentor, SCORE New Haven
Julie has been a SCORE volunteer since 1997. She has 20 years of experience in business, starting a manufacturing, wholesale and retail jewelry company. After selling her business, she dedicated herself to helping other entrepreneurs start and expand their business.
www.scorenewhaven.com | @juliebrander | More from Julie

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