Managing Your Credit Load (1275)

Before you commit yourself to a credit obligation, you need to be sure that you will be able to repay the loan. The best way to mange your credit load is to prepare and follow a monthly spending plan. A spending plan starts by identifying your monthly income—take- home pay plus money from other sources, such as child support or other payments. Next list your monthly expenses. Start with those that are fixed each month like rent or mortgage payments, loan payments and planned payroll deductions. Then list all your other monthly expenses. Don't forget to include occasional or periodic expenses like insurance premiums, car maintenance and repairs, gifts and seasonal expenses. Add up your totals. If your expenses exceed your income, you will need to make adjustments in some of your spending categories. Use your spending plan to guide spending decisions, especially spending in flexible categories like food, clothing, recreation and entertainment.

Monitor your plan by keeping track of what you spend in these categories to be sure you don't exceed the spending targets in your plan. Keeping accurate records helps you to see where your money goes and make adjustments for future spending. Recording your expenses, including credit obligations, can be easy if you do the following:

- keep your records simple and accurate.

- appoint a family record keeper to assume responsibility for recording family expenditures.

Each family member needs to cooperate by reporting expenses, so set a regular time schedule for record-keeping. Develop a tracking system that works well for your family, and analyze household living expenses regularly. Review records weekly or monthly in relation to total expenses and income.

As you track family expenditures over time, ask yourself these questions:

- have I listed all expenses?

- am I meeting my financial obligations?

- is my spending within my income?

- am I satisfied with what my money is buying for me?

- am I satisfied with my savings?

Look at your spending habits. Do you find areas where you waste money? What changes can you make in your spending to have more money for paying off your debts or increasing your savings?

Money management means getting the most for your money. Good money management habits can help you take control of what you have. Money management requires careful planning, spending wisely and saving money.

For more information on this subject, Please visit the College of Agricultural Sciences Publications Web site.

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