If you look at your savings account and see it empty, it is time for a change. If you see that your debt keeps climbing, it is time for a change. Can you make a change and effectively help your financial situation? You bet you can if you want to make the change. Change is often not easy but it can be accomplished with dedication to the final outcome.
You must start by deciding what needs to be changed. Do you want to have an emergency fund built or do you want to reduce your debt? This question often gets financial advisors arguing. Which do you do first? My suggestion to you is to determine what you need to do first. Both of them are needed for a good financial future, but deciding which to do first is up to you. If you have a lot of debt but are managing it by paying it on time, then you might want to start working on your emergency fund. If you are having a problem paying on time or your balances are really starting to get up there, then reducing your debt should be your priority.
No matter which way you decide to go, the most important thing is to setup a budget. Once you have a good budget built and you are following it very closely, you will have that extra money to apply to either your emergency fund or your debt. Budgets are the key to getting a handle on your finances. There are many ways to start a budget and even quite a few software programs that can help you. You don’t even have to be a computer geek to use them. Any tool that you use to help you is a great tool.
If you have bad credit, then get it cleaned up. If your credit is bad because you have a lot of debt, then consider reducing your debt first. Many people will need their credit and if you have poor credit, then your credit won’t be able to help you. If your car breaks down, you lose your job or any other life changing event, your credit might be able to help you. Without your credit you might end up losing more than you bargained for. Take the time to review your credit and get that on track.
Mel Jensen is a retired Customer Service Manager with Ovation Credit Services.
He has written many articles regarding Credit Repair.
