Managing the household budget is tough, in the best of times and especially in the worst of times. But there are ways to make your money work harder for you and to reduce the interest rates on loans and credit cards to help lower your family’s bills. If you are looking for steps that can be taken to reduce expenses, consider switching credit cards or consolidating multiple accounts into one. Balance transfer credit cards might be the money tool your budget needs to lower your interest rate and get your budget back under control.
How do you know if it is time to switch credit cards as a money savings tactic? Let’s start with the basics of budgeting and debt. Three of the big economic indicators used to gauge the financial health of our country are:
· Jobless/Unemployment Rates
· Credit Card Debt
· Amount of Savings and Investments
These factors also have a direct impact on the financial health of individual households. If the primary wage earner is unemployed, underemployed or goes through periods of layoffs, union strikes or lack of work in their preferred industry, the income of the family is negatively affected. Full time, gainful employment is needed to establish a standard of living and financial stability. It can take a long time for the average family to recover from this type of financial setback – but it’s not impossible.
Households that have several credit cards with high balances subject to high interest rates are at a disadvantage. Family budgets straining to pay only the minimum payment on the outstanding balance (rather than paying off the balance every month) are just treading water or slowly sinking financially. In 2012, the average American household with at least one credit card has almost $16,000 in credit-card debt. When the average American salary is $47,000, we obviously need to do a better job at controlling our personal debt and reduce our credit card balances to more a manageable level
Typically, households that are living paycheck to paycheck or not able to pay their monthly bills on time are not going to be able to save any money. The lack of savings for major upcoming expenses like braces for teenagers, college for the kids or retirement of the wage earners can affect two or more generations within just a decade or two. Not having saved for these expenses ends up putting family members at risk of not getting the needed services or having to go into debt to get them.
Assuming your household’s primary wage earner is working full time and the income is relatively stable, reassessing the budget and making adjustments will be based on controlling what is spent and managing debt. Living within your means, paying off debt and planning for a secure financial future are your goals. Use these strategies to get your budget back on track:
· Track all expenditures and know what you are spending money on every month.
· Keep impulse purchases to a minimum.
· Identify and change bad spending habits.
· Commit to a savings program that sets aside a regular amount for a long term goal.
· Reduce the amount of interest on loans and credit cards and pay down the balances as quickly as possible.
Companies are well aware of the business opportunities in helping households manage their money and get out of debt. According to Ready for Zero, one out of three Americans is crippled by credit card debt, paying as much as 30% annual interest. Attacking the high interest rates by switching cards and controlling spending can wipe out that debt in just a few years.
With motivation and the right tools, we can all use better budgeting tactics to get out of debt and be prepared for a secure financial future.