Money-Smart: Credit

So, I’ve been really working hard at getting money-smart. 2010 is my Financial Power year, meaning I will gain power over my money. My biggest “obsession” lately has been budgeting. Being the sole bread winner in a house of children and animals can be heavy on the wallet. But with lots of self control and determination, we single moms can survive financially!

Many of us find it far easier to just look the other way when we’re spending money.  At the end of the pay period, we’re desperate for the next check. But we don’t have to cringe each time our bills pop up. Someone once said, “It is far greater to predict and prevent rather than react and defend.” You know what bills are due each month. You know when you get paid and you know how much money you are bringing in. I’ve had to totally come face-to-face with my money and myself! I found a great budgeting spreadsheet to help me focus on being aware of what I was spending and how much is too much.

Okay, I’m putting my January budget in plain view for anyone to see. Now remember, we are still in the second week of January—we aren’t even halfway through yet! But already I see where I’ve overspent. (Now, now, before you get on to me—My dog needed a vet visit. These things happen.)

Anyway, check out what I am using and try to do something similar for yourself. Control your spending! Know what you’re doing with your money and prevent instead of react!

Bills	Budget	Actual	Difference ($)
ADT	$ 31.02	$ 31.02	$ -
Auto Loan	$ 603.90		$ (604)
Insurance	$ 123.00	$ 123.00	$ -
Cell Phone	$ 120.00	$ 120.00	$ -
Credit Card	$ 39.00		$ (39)
Day Care	$ 816.00	$ 400.22	(416)
Credit Report	$ 15.00		(15)
NetFlix	$ 15.00	$ 15.00	-
Necessities & Other	Budget	Actual	Difference ($)
Fuel	$ 85.00	$ 51.02	$ (34)
Food	$ 150.00	$ 144.42	(6)
Diapers	$ 45.00	$ 14.47	(31)
Soymilk	$ 18.00	$ 8.58	(9)
Ronin's Milk	$ 16.00	$ 7.62	(8)
Wipes	$ 30.00	$ 8.47	(22)
Pet Care	$ 45.00	$ 117.50	73
Kids Clothing	$ 20.00		(20)
Home Supplies	$ 50.00	$ 5.00	(45)
Kids Supplies	$ 30.00	$ 2.14	(28)
Other	$ 50.00	$ 17.71	(32)
Bank Charges	$ 6.00	$ 3.00	(3)
Total Expenses	Budget	Actual	Difference ($)
	$ 2,352	$ 1,113	$ (1,239)

My bank, USAA, offers so much great advice that I wanted to share some with you. Below is an excerpt from the Advice Center of USAA Federal Savings Bank.

Q:  I have several credit cards that are paid off. Will it help or hurt my credit score to close them?

A:  It depends on how much debt you are carrying on all your credit cards combined. Each credit card provides a line of credit to offset any debt carried on the others. By closing one, you reduce the total line of credit to help your overall ratio of credit used, to credit available to use. Ensure that your total credit card debt does not exceed 35% of your total credit available. For example, if you have $10,000 in credit available make sure you owe $3,500 or less.

The ideal would be to pay off all of your debt and then keep two or three major credit cards including one that shows the longest credit history. Make a list of all other cards you want to close. Keeping that debt to credit limit ratio in mind, close them in order of newest to oldest, at a rate of one to two per year, and never within six months of a major purchase like a car or home. Obtain a free credit report once a year at annualcreditreport.com.

While in the process of closing your credit card accounts, use any non-merchant cards such as Visa, MasterCard, Discover or American Express to make one purchase each month and then pay the balances off in full. This will keep the cards active, and good payment histories accumulating on your credit report. Payment history accounts for a whopping 35% of your credit score.

Stop saying "yes" to store credit cards for promotional discounts. They undermine the percentage of your score that is attributed to the length of time you have had accounts plus new inquiries also negatively impact your score. Finally, most merchant cards have high interest rates. If you don't pay the balances off in full those promotional discounts cost you in the long run.

Also, check out this really helpful website to find out What's real and what's a scam.
Sources:
https://www.usaa.com/inet/ent_utils/McStaticPages?key=advice_QandAs_Debt_Webinar&offerName=prihome_advice_QandAs_Debt_Webinar

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