Credit Card Quick

The Quickest Way to Financial Security

Introduction

There is only one route to take when it comes to financial security, and that is responsible spending and saving. However, there are a number of factors to consider when seeking financial security.

• Always pay yourself first – Before you even touch your paycheck, pay yourself first. This means taking a percentage of your paycheck (aim for 10 percent) and putting it into a high-yield savings or money market account.  If you want to build a financial cushion in case of unemployment, disability or personal emergency, you will need to save a portion of your income, each and every paycheck, without fail. Many economists and financial experts recommend aiming to save at least six months of income in an easily accessible savings or money market account.
• Never carry a credit card balance – The number-one rule when it comes to credit cards and financial stability is to always pay off your balance. Credit cards are practical and convenient, and are often a useful way to build a great credit history. However, they can also be financial sink holes, plunging us into debt and creating a financial problem that magnifies if we can’t afford to pay more than the minimum balance. The easiest way to avoid financial trouble and to secure a healthy, financial future is to never spend more than you can afford to pay off each month.
• Be cautious about what you purchase on credit – There are a few things that may be purchased on credit, such as a car or a home; otherwise, wait until you have saved up to make other large purchases. Using credit to buy furniture, clothing and to take vacations is the quickest way to get in over your head in debt. A good rule of thumb is to only purchase within your means, and that may mean saving up for things you want most – not charging them for instant gratification.
• Always, always take advantage of an employer-based 401K plan – If your employer matches up to a certain percentage of your 401K contributions, then you must take advantage of it; otherwise you are essentially turning your back on free money.

The Top Five Reasons why you Should Pay off your Credit Card Debt this Year

Credit Card Debt

If you want to make a fresh financial start in 2011, perhaps the best place to start is with your credit card debt. Simply put, there is no good reason to carry around mounds of credit card debt. We have all found ourselves, at one time or another, in a situation where we’ve spent more than we had anticipated; however, it is important to look ahead and not worry about bad spending habits of the past.

There are a number of great reasons why you shouldn’t be paying on credit card debt every month. Here is our list of the top five reasons why you should make 2011 the year you say good-bye to credit card debt:

1. You have better things to do with your money every month – Writing a check, each and every month, to your credit card company is not an enjoyable task. This is because there are probably countless other things you could spend that money on each month. From setting aside grocery money to handling your ever-increasing monthly gas bill, there are much better ways to allocate your monthly income.
2. You can start getting serious about saving for retirement – If you’re like many Americans, you want to save more for retirement, but you can’t seem to find the money in your budget. Now, imagine how satisfied you would feel if you were able to take the money you spend on credit card debt every month and sock it away into your 401K or IRA. Sounds exciting, doesn’t it?
3. You can concentrate on paying off other debt – From student loans to medical bills and car notes, Americans often have other installment-type debt that must be paid on a monthly basis. If you didn’t have to pay on credit card debt every month, you could instead focus on paying off your other debts so you can really lead a debt-free lifestyle.
4. You can (finally) beef up your savings – Instead of writing a check to the credit card company, write a check to yourself, and watch your personal savings grow.
5. Because paying finance charges is like throwing away your hard-earned money – You work too hard for your money, so don’t throw it away by paying unnecessary finance charges to your credit card company each month.

How to Protect your Credit Score Following a Layoff

Credit Score

A layoff, however common in today’s economy, still comes as a bit of a shock to most Americans. Aside from being emotionally upset and mentally stressed, you may be worried if your credit is going to take a hit during this difficult, financial time.

The bottom line is that you can protect yourself and your credit now, even in the midst of a layoff.

Aside from curbing your spending and putting yourself on a tight budget, there are a variety of things you can do now to protect your finances and your credit following a layoff:

1. Always pay your credit card on time – no matter what! The worst thing you can do is to simply throw your hands in the air and admit defeat. Do whatever you need to do to pay your credit card bill on time each and every month. You may want to consider lowering your monthly payment to cover just the minimum payment while you are unemployed, and that’s ok. However, not paying at all will do nothing more than put yourself in a sticky situation regarding your credit score.
2. Use your emergency fund to get by – Now is the time to dip into your emergency savings funds, if necessary, to pay your bills and take care of your monthly debts and obligations. However difficult it may be to use your savings account, remind yourself that this is the reason you established it in the first place. You can also replace your savings once you get a new job, but you can’t repair your credit that easily.
3. Avoid dipping into your 401K – In extreme circumstances you may need to borrow against your 401K to get by during a layoff or other financial difficulty, but this should be the exception and not the rule. The penalties and fees you will pay to borrow money from your 401K simply don’t make sense.