SPENDING FUTURE INCOME 5

If your household’s lifestyle pushes you to keep spending income several months into the future, to live beyond your means and to rely heavily on credit cards, you probably have a credit score below 600. This puts the interest on your credit cards higher than 18% or at least an addtional annual expense of more than $2000 for every thousand dollars of credit card balance. This does not include penalties for late payments which you probably incur for almost every bill. This adds another $1440 to your annual expense for every thousand dollars of late payment.

So, set up a household budget that is within your monthly income and affords you to save at least 5%. Stick to it and keep your spending to necessities. In this drive to live within your means, you need the commitment of all members of your household –including the children.

Educate everybody in the household about the household budget. Commitments from everybody are more easily obtained if everybody is involved in the making of the budget.

image from Microsoft Clipart