When you spend more money than you make each month you arebound to have money problems very quickly. The bad part isthat most of us never realize we are spending that much untilit's too late.
How many times have you used the credit cards to buy a TV, school clothes and supplies, fixed the car, or any number ofthings and not realized that you just exceeded your monthlyincome. You may have even realized it but thought there isalways next month.
Credit cards are the biggest culprit but they aren't the onlyway to spend more than you make. Things like payday loans orcar title loans also come to mind. Paying $15 to use $100 fora week doesn't seem too bad. However, when you consider thatyou are paying almost 400% in interest over a years time theseloans make interest on credit cards look like a great deal.
Normally, installment loans have a lower interest than eithercredit cards or payday loans but they can still cause problemsif you aren't positive that you can make the payments each month.
I consider a house payment and the purchase of a car the only real legitimate reasons for paying interest. Veryfew people have the means to make these purchases with cash.If you aren't careful you can still get yourself into troubleby buying or renting more house that you can afford or havingcar payments that don't fit your budget.
I just recently received an email from a lady stating that herand her husband wanted to buy a new car but really didn't knowif they could afford it. This family probably saved themselfa lot of headaches just by asking that question. I wrote backshowing her how they could determine if they could afford the car or not.
My answer to her question was to have her develop a budget,listing all of the other bills and expenses they have, andthen see what's left over. I also reminded her that she shouldconsider the extra costs like insurance, maintenance, etc.
Over the years I have seen people with as little as $500 a month income manage their finances very well while someoneelse with $5000 income can't make it last the entire month.It all boils down to planning. If you plan your bills andpurchases each month with the goal of not exceeding your income, you can make it on almost any income.
How Did I Get In This Mess?
When I was younger and having all kinds of money problems, I askmyself a thousand time how I got myself in this mess. It seemed like one day we were doing fine financially and the next we owedeverybody. How can it happen so quick?
Where Does Your Money Go? Taxes
Trying to stay within the theme of Budget Stretcher, I thought a series of articles on knowing where your money is going may help some of you understand just how much you pay on certain expenses.
Preparing For The Worst
I would say that most of us have experienced money problems at some point in our lives. This could have been caused by the lossof a job, injury or illness, over spending, and the list goes onand on.
