Making good financial decisions

Posted by Carl Gould on August 10, 2016

Unfortunately, a huge number of Americans make poor financial decisions which lead to bad credit scores. According to some studies, more than half of Americans have poor credit scores. (1) What is even worse is that in many cases they are not aware when they made those bad decisions, even though many of them have some doubts. The bad credit scores that we are witnessing today in many cases are just mirroring the misconceptions about how credit functions.

In order to make good financial decisions, you must be sure how credit works. In this article, we will discuss some of the things that will help you learn more about this subject and how to make sound and effective financial decisions.

Be careful with the debt

While having a debt is a normal thing, this doesn’t mean that you can get very far in debt without feeling the consequences. According to many experts, the credit card debt should not exceed your 3-month income. So, if you are making about $3,000 a month, then your credit card debt should not go over $9000. If you’ve got a big mortgage and you must make several car payments you will certainly want to reduce your credit card debt. Maintaining this debt under 30% is the best option. Of course, if you are debt-free that’s even better.

Making payments in a timely manner

We can all agree that it is more reasonable to pay everything you charged through your credit card completely instead of carrying the balance. The truth is that credits come with interest rates that start at 6% and end at over 20%. This means that people will have to pay a lot for everything they carry a balance on. In case you purchase anything with your credit card, try to pay this amount completely at the end of the month. Dinners out, gasoline, groceries – these are some of the things that we are buying with credit cards and forget to pay them in full at the end of the month. Carrying this debt as a balance is a poor financial decision.

Paying car loans and mortgage in a timely manner

Last year, the total auto loan debt in America has reached almost 890 billion dollars. (2) One of the main reasons for that is the fact that many people are not paying their loans on time. In case you want to reduce your payments, you should review the credit cards first. Experts agree that it is a better idea to pay the interest than to avoid payment. Your credit score will be at risk if you don’t pay these things in a timely manner.

Cutting the debt

Come up with a reasonable budget. This budget should let you live a normal life and help you cut the debt at the same time. Keeping a money diary can be very helpful. When you analyze where your money is going, you will be able to reduce the expenses. The money you save should be used to reduce the debt.

Making good financial decisions is not difficult, you just need to follow these tips and be disciplined.

Carl Gould is a business strategist, and growth expert. He has written 5 books in the area of creating business success, and is the co-host of the weekly radio program, ‘Quit and Get Rich’ ( Carl and his team of experts advise companies and organizations to grow to the next level. What is the next level for you?


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