Make a plan to avoid debt

  
     
May 17, 2017

Too much debt? You are not alone. With the passing of the holidays, many in Acadiana find themselves with destroyed budgets, low bank balances and increased credit card debt that will take months from which to dig out.

The kindness and generosity toward family and friends during the holidays often results in financial hardship during the beginning of the new year.

It does not have to be this way. Better Business Bureau Serving Acadiana reminds consumers that planning during the year can make financial hardships a thing of the past.

This all starts with making a budget, prioritizing spending and sticking to a solid financial plan that will allow people the extra money they need for special things such as large purchases, the holidays or the unexpected such as automotive breakdowns or the failure of a major appliance.

Why pay $6 for a cup of coffee at a coffee shop when you can make it at home for a fraction of the price? Doing this just once a week can add up to $288 over the course of a year. The same goes for eating out and other frivolities that serve as budget busters over time.

BBB offers the following tips to help avoid future financial difficulties:

  • Track your spending. Whether you prefer an app on your phone, computer software, or simply a notebook to jot down your expenses, keeping track is critical. It helps you see where you are actually spending your money, rather than where you think you are.
  • Categorize your spending. Create categories based on necessities (housing, utilities, food, transportation) and luxuries (entertainment, dining out, travel). If you have credit card balances, student loans, car payments or other debt, make “debt reduction” one of your necessary categories.
  • Set up a budget. Once you have an idea where you are spending money, you can set up a realistic budget. Remember, the budget only works if you stick to it!
  • Pay down debt. One method is to pay off the credit account or loan with the highest interest rate first (the “ladder method”). Another is to pay off the smallest balance first so you feel a greater sense of accomplishment (the “snowball method”). Use whichever methods works best for you.
  • Pay bills on time. Consider online bill-paying that eliminates writing checks, buying stamps, etc. Automatic payments can be scheduled ahead of time and can help you avoid late fees and penalties for missed payments.
  • Save for the big things. Big purchases, such as vacation or holidays, can easily blow your budget. Avoid going into debt for these expenditures by saving up ahead of time and only spending what you are able to save. Many banks and credit unions offer savings clubs that might help.
  • Emergencies – car or home repair, unexpected medical expenses, job loss – can blow your budget. Financial experts suggest an emergency fund of 3-6 months’ living expenses. If that is too ambitious, start smaller and build up.

 

“Look for the Seal” and Start with Trust®. BBB Serving Acadiana is a private non-profit organization that strives for a trustworthy marketplace by maintaining standards for truthful advertising, investigating and exposing fraud against consumers and businesses.

Please contact Better Business Bureau at (337) 981-3497 24 or bbb.org 24 hours a day for information on businesses throughout North America. Consumers can also sign up for our free BBB “Scoop” eNewsletter by visiting bbb.org and clicking on the “Programs & Services” tab.

BBB Serving Acadiana services the parishes of Acadia, Evangeline, Iberia, Lafayette, St. Martin, St. Landry and Vermilion.