Cash Management Information
Results from a Fall 2006 survey by Bankrate.com found that the average bounced-check or nonsufficient-funds (NSF) fee is now at a record high of $27.40. While a payday advance is a viable option, daily cash management is the key to becoming debt-free.
Debt management is a numbers game. With a little extra practice and focus, most anyone can win. Here are some simple debt management techniques that turn the score in your favor:
The "Balance Sheet"
The best way to manage your money is to know exactly how much income you have coming in and how many expenses you have going out. The simplest way to track this is to create a balance sheet that details where your money goes each month.
To get started, first divide a piece of paper into two columns. On the left hand side list all your income. Include your wages, child support, Social Security Income, and any other sort of payment you may receive on a regular basis. On the right hand side, list all of your expenses. Include all your regular expenses, like your mortgage, rent, car payment, utility bills, phone bills, and tuition payments. You should also include what you spend on groceries, gas, clothing, and any other incidental expenses you incur on a regular basis.
Set Priorities
If you have more expenses than income, your first step in creating a balanced budget is to think about your priorities. Determine what you have to spend on the necessities, like your mortgage or rent, food and utilities. After you've established what you need to cover those things, then take time to consider where you can make some changes. Talk to everyone in the household, including children, about new, smarter spending habits. If everyone participates in setting budget priorities, making the decision to not overspend will be much easier.
Tackle Your Debt
To pay down your debt most effectively, first learn the difference between good and bad debt. Good debt increases the value of something over the long-term (home improvement, college education). Bad debt applies to those things that are consumed quickly with no long-term payoff (vacation, eating out).
When dealing with your debt, always focus on high interest loans and credit cards first. Try to pay extra on your credit card bills and go beyond the minimum payment when you can.
Track Your Spending
One great way to keep track of what you spend is to use a shopping list. Whether your buying groceries or gifts, a list will keep you focused and prevent impulse purchases. You can also keep a list of what you spend during a week, or just save all your receipts in an envelope. Once you've kept track for a week, sit down and really consider where you can cut back. Things like eating out and even small impulse buys can really add up fast.
Start Saving
Give yourself a positive reason to save and aim for a specific amount. Have an specific, set amount of your paycheck automatically deposited into a savings account so you never miss it. If you ever receive extra money (i.e. tax return, a raise, a gift), put that money in savings instead of spending it. Build a cash cushion for unexpected expenses (losing a job, medical care, etc.).
By knowing how much money you have coming in versus how much you are spending, you can find ways to reduce your spending and pull yourself ahead of the game.
Check out these websites for more helpful advice:
For more helpful advice click on Learning to Budget
