Be Credit Smart

San Diego, CA.  "School days are over and vacation time is here. For thousands of consumers, however, this summer's vacation may linger into following years, because they will use credit cards to take a vacation and make other credit based purchases,” says the nonprofit Institute of Consumer Financial Education (ICFE), a San Diego based group helping consumers of all ages become better spenders, regular savers and wise users of credit.

"Some consumers may be vacationing again this year, while still carrying over some debt from last year's vacation, just like many do at Christmas time. The ICFE helps consumers learn how to better manage their spending and thus make every year free from continuing debt problems. There are some steps to take right now to help prevent taking on more debt," says the ICFE.

1) Track individual spending habits: For at least two weeks, write down every expense made whether it is with cash, a check or a credit-based purchase/expense. This should include EVERY expense, big and small: insurance premiums, utilities, car payments, video games, sodas, lottery tickets, packs of gum, and lunches, etc.

2) Create a spending-plan, a/k/a budget. Write out a spending-plan or budget sheet. On the left side list income, on the right side list, as completely as possible, all expenses and bills paid within a calendar month. Next, compare spending and expenses to take-home income. If your outgo exceeds your income, your upkeep may be your downfall. Review the plan for ways to obtain greater value with your spending to avoid overspending. An overspender PAYS TOO MUCH for things, because of no comparison shopping or credit based purchases. Another type of overspender is someone who spends more than they have or earn.

3) Learn to distinguish between needs, wants and wishes. For example, you might need that annual checkup with your doctor. You may not need to have better stereo speakers. Your youngsters may need haircut; they only wish they had the latest electronic video game.

4) Save more of your earnings. If you are in pretty good shape with your spending then look for ways to save even more money to set aside for the future. Experts vary on the minimum amount to recommend, however the consensus is a minimum of ten percent of your gross income. The important thing, however, is to get into the savings habit early and then gradually increase the amount you save. Getting a savings program started is easier than you might think.

Begin by saving a dollar a day and all your pocket change, do it everyday, even weekends, and it will average about $50 a month. If you can afford more than a dollar-a-day, then you will save even more. Even if you take this monthly accumulation and pay down a debt, you are still ahead. You have developed two new and positive habits, savings and paying down your debts.

5) Carrying old balances on credit cards is very expensive, so paying off old credit card debts as quickly as possible is a good thing. Take the account with the highest rate of interest and pay as much as you can, over the minimum, each month until you have paid it off. Then, work on the account with the next highest interest rate. Always, always pay more than the minimum payments required on your charge cards.

6) Make a determined effort to live on less money as a positive change in your life-style and free from credit card and other unsecured debt.

If you find yourself paying credit card bills from the past, or need help changing detrimental spending habits, visit www.icfe.info and click on "Mending Spending" and "One-page Spending Plan."

To receive the same information and one-page spending plan work sheet by mail, please send $1 and a self-addressed, 60 cent stamped envelope to:

ICFE Money Helps
PO Box 34070
San Diego, CA 92163-4070

©  Paul Richard, RFC and the Institute for Consumer Financial Education. All rights reserved.