Economic Recovery Doesn’t Mean You Can Throw Budgeting Out the Window
The economy may finally be starting to turn itself around. Recent figures show better times may indeed be just around the corner. But that doesn’t mean you should stop doing what you’re doing to lower your debt, and it definitely doesn’t mean you can start freely spending again. Sticking with your “hard times” budgeting plan in the “good times” makes a lot of good money management sense.
The last thing you want to do is start building up a bunch of debt, especially if you still have debt to repay. Budgeting your expenses, even when things aren’t quite so “tight” will ensure that you have the money when you need it, for things you truly need. Remember those feelings of helplessness and confusion when you couldn’t make those first months’ payments? Do you really want to go there again?
The best thing you can do when you have a little extra is to put it in the budget. Pay off your credit card balances, make a little extra on the car loan or mortgage payment. These can help to ensure that your remaining debt is paid off quicker, and that your credit score will improve even faster with each pay-off you make.
Another place you can “spend” that extra cash is with a savings plan. You’ve just recovered from a financial fall, and chances are your savings is gone, or certainly isn’t what it used to be. Building your savings is a good future investment. These good times may not last forever – in fact history tells us they probably won’t – and you’ll be better off when the next round of hard times hits.
If you do have to add to your credit card balance, do it for things that are worthwhile, in a manner that pays you back somehow. Some purchases such as computers and appliances practically require a credit card to ensure that the item is insured, or guaranteed, or has with a service agreement. Some purchases may be worth their weight in the reward points they bring in – especially if you can then use those points to save money down the road on things like airfare and motel stays. But remember to include room in your budgeting to pay off your balance as soon as possible, to avoid paying much more for that new laptop than those airline tickets cost. Paying off your balances is just good money management sense. It’s just a smart practice to develop.
Watch your spending habits. Watch your statements to determine when and how you spend your money. Are you noticing a lot of charges on Fridays or Saturdays? Late night over the Internet? These could indicate emotional buying. You’ve had a hard week or a long day and a nice shopping trip relaxes and soothes the soul. Perhaps a nice bubble bath or long walk would be healthier for you, and your credit card balance. You might want to find one item that you just “have to have” and save up for it by adding it to your budgeting plan. Buy it and then immediately add the amount to your credit card payment, so that you still have the joy of owning the item, without the worries of interest rates and mounting debt. Watching your statements once a month can mean the good times might really be here to stay!