By: Laury Adams

1. Determine your after-tax financial boundaries.  What is the amount you have to allocate to spending, paying debts, and saving after all mandatory deductions are made from your paycheck?    Remember, you must to pay the IRS before ever going to the supermarket.

2. Make a budget!  Start with your committed expenses and enter all amounts in the order of your priorities.  Next, enter the remaining necessary expenses, then desired expenses. 

Payments to creditors are committed expenses.  Know that you will have contractual liability whenever you accept the responsibility for any type of credit account. Your payments on that account will be reported to the credit bureau.  Bad credit, if reported correctly, will not be changed for seven years.  Do not sign for anyone or let anyone use your account.  That could damage your record.

3. Determine an amount for all irregular expenses—those you will not incur every month, but will incur at some time during the year (holiday gifts, car repair, medical and dental expenses, pet care, etc.).  Add up all irregular expenses and divide by 12.  This is the amount that should be escrowed into a special account each month to pay for these expenses.  Otherwise, you will be tempted to use your credit cards to charge these items.

4. “Never-to-be-broken Rule.”  Always PLAN TO PAY, THEN PURCHASE!  Do not purchase, then plan to pay!  Where will the payment for this purchase fit into your budget?  Think of credit as DEBT; it is NOT money! 

5. If you must purchase an item for which you accrue debt, use an online financial calculator to determine the total price you will pay by the time this debt is totally paid.

6. If you cannot pay your credit accounts in full each month, be sure to protect you credit rating by making at least the minimum payments to all creditors BEFORE the due date. It’s better to pay every creditor the minimum instead of juggling a larger payment from one to another each month.  Do not pay any extra on credit accounts until you have stabilized your finances for at least three months.

7. Make a “Winning at the Credit Game” spreadsheet to use until you reduce your debts to $0. Use a column with each of the following headings: the name of the creditor, the interest rate, the due date, balance before the payment, the finance charge, the payment, and the new balance.   Record this each month as you pay your bills.

8. Work these credit card payments into your budget as PAST DEBT.  Do not accrue any additional debt.  All future expenses must be worked into an “Expense” category in your budget and paid for in cash.   Remember: CREDIT IS DEBT, NOT MONEY!

9. The key to good financial management is IMPLEMENTATION!!   Plans are useless unless you TAKE ACTION!  Carry out the structure you have planned.  MONITOR and RECORD all your expenses.

10. When all else fails, use the envelop system by putting a set amount for each category of spending in an envelop each time you are paid. 

11. Draw a certain amount of cash as allowance each week… not use ATM machines for any more than this, and do not write checks at the supermarket for an additional amount. 

12.Be prepared to pay for any charges put on your account by another person!  Also, know that you are responsible for the full amount of charges put on a joint account. 

13. Eliminating all consumer debt is the first step in achieving other financial goals. 



Copyright 2008 Laury Adams