Get Out From Payday Loan Debt: The ABCs of Financial Planning
By J.J. CameronPayday Loan Writer
Yikes. Total U.S. consumer debt stands at over $2 trillion. Not even thinking about any balances from payday loan online use, more than 44 million American households carrying average credit card balances of $8,025.
It's clear, therefore, that many Americans need more astute financial education. Andrew Housser, co-CEO of Freedom Financial Network, LLC, has it for you. He breaks it down by the ABCs:
- A = Add it up. Begin by understanding what you have. Add up all monthly net household income (the amount left after taxes and other paycheck deductions such as health insurance and 401(k) contributions) to determine how much you have to spend.
Then categorize your ongoing monthly expenses into fixed expenses (like rent, mortgage or personal loan payments), variable expenses that are "must-buys" (food, gas, medicine), savings, and finally, spending money (for unexpected expenses and entertainment). Add those up to understand your cost of living.
Subtract expenses from income. If that number (your bottom-line cash flow) is negative or does not help you achieve your short- and long-term financial goals, find a way to either increase your income or reduce your expenses.
- B = Budget, budget, budget. If you've followed "A," your budget is already halfway done! At the beginning of the month, map out how you will spend your money in the coming month.
Don't forget to pay yourself first. Be sure to add a category for savings, and guard it fiercely.
- C = Cash won't crash. If you're among the Americans carrying an average of 16.7 credit cards, put away the plastic. Cash out your spending money in cold, hard bills, and don't touch the plastic for discretionary expenses such as clothing, movies, coffee, dining out or happy hour.
Most importantly, never charge more than you pay off at the end of each month. This is the reason why savings account payday loans are often dangerous; individuals don't realize how much they'll owe after a few weeks.
