Plugging Money Leaks to Increase Your Credit Scores
The financial gurus say to pay down your debt if you want your credit scores to rise. That’s sound advice, right? But you may think that there’s no room in your budget for the extra money to pay down debt.
The truth is, if you’re like most people, your wallet may be spilling money like the Gulf is spilling oil. It’s just not as obvious.
How to stop the “money spill?” Start with a budget.
I know – no fun. But you do need to know how much money you need to cover the necessities, and you need to know when that money has to be paid. Not keeping track of credit card payment dates leads to late payments, and late payments lead to late charges – and late charges are a serious money spill.
Unless you’re a freelancer or commission-based, you know how much money you take home each week or month. Write that down. Now write down all those set obligations –like credit card payments – along with their due dates. Subtract outgo from income and you’ll know how much money each week is already “spoken for.”
You’ll probably see that you have more money “left over” than you expected, because that extra money has been leaking out of your wallet a few dollars at a time without you noticing it.
It leaks out for little things – items that cost $10, $5, or even $1. Instead of filling a travel mug at home, you stop for a coffee on your way to work. If you rent a movie you pick up some candy. If the kids go along to the grocery store you give them each fifty cents to put in the vending machines. If you see tank tops for $3 each you buy 3 – even though you have 6 in a drawer at home.
To stop the leaks: Before you buy anything, ask yourself “Do I really need this? Will I really use this? Will this add value to my life?” If the answers are no – keep the money and use it to pay down your debt.
If you add even $100 per month to your debt repayment, your credit card balances will start declining, and your credit scores will begin creeping upward. Remember – every dollar you pay down will never cost you another dime in interest charges.
Finally, before you put any expense on a credit card, ask yourself if you’ll be able to repay it in addition to your next monthly payment. If the answer is no, and the expense isn’t an emergency purchase, then just don’t buy.
Mike Clover
CreditScoreQuick.com
