How To Avoid a Personal Bailout
As we begin 2009, the U.S. economy is in ruins. It has become, as a result, increasingly more important to protect your assets, as well as your identity. In order to make 2009 a better year for your money in these harsh economic times, here are some ideas and suggestions to get your financial health in line.
1. Understand the difference between wants and needs. Being financially stable depends on you being a responsible spender. For example, paying your mortgage is a need, buy new clothes is a want. Being frugal is pertinent. Cut out coupons from the newspaper and pay attention to sales on things that you frequently need.
2. Have a cash stash that is equal to approximately 6 months of living expenses. Average out your utilities, food and other expenses and save some for a rainy day. Put a little back each payday in an account that you cannot touch or dig into. This is your emergency fund and shouldnt be touched unless it is absolutely necessary. If you DO dig into the fund, that money needs to be replaced as soon as possible.
3. Categorize your bills and start to pay them down or totally off. Start with personal loans, then move onto credit cards. It is important that these responsibilities be taken care of as quick as possible. The interest accrued by credit cards and loans is staggering over the span of the life of the loan.
4. It has become increasingly more important to protect your identity. Identity theft is becoming the favorite crime among criminals. It is estimated that it costs victims of identity theft over 5 billion dollars a year to pay for identity theft. However, identity theft protection is now offered with services like Life Lock. Life lock guarantees the protection of your credit backed by a $1,000,0000 payment to you fit they don’t. They will help reduce the number of credit card offers you receive and will actively monitor you credit.
5. To keep you from dipping into your savings unnecessarily, put extra money into CDs, money market accounts, or other securities that are harder to access. That way, you won’t be tempted to spend all that hard saved money.
6. Put yourself on a budget and KEEP that budget no matter what. This is easy to do, folks. Make up jars or boxes with labels like entertainment, pizza, or eating out. Each payday, put $20 in each jar. That is your allowance for that extravagance until next payday. When the money in the pizza jar is used, you simply dont eat pizza again until next payday rolls around. Sounds a little harsh, but it works and you HAVE to limit yourself or you will have no idea where the money went to.
The current world economy is in bad shape. That is no big, sensitive secret. As a result, we have already seen government bailouts of major companies we thought would always be there. Dont let that happen to you in 2009. Follow a simple budget, look for deals and just spend smarter.
If you are careful with your money, you won’t need a bailout. Maybe, you will one day be teaching CEOs how to run the finances of a company!
Linda Seamore is an expert on the subject of personal finance and has written lots of articles on it and on credit protection programs like LifeLock. She suggests researching all credit protection programs like www.lifelock.com before signing up.
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