10 tips for money mojo

Follow these budgeting tips to have enough cash for emergencies and savings.

It may be from your birthday, your part-time job, a scholarship, grant or loan. Wherever you got that cash, you’ll need a plan on how to spend it so you can ensure it covers everything you want. Follow these 10 tips to stay in the black.

1. Create a budget
A realistic budget will identify exactly what you are spending your money on, and will help you separate your needs and your wants. It will also show you if you have any extra money to spend on your wants—or how you’ll repay any debt you may decide to incur.

2. Open a savings account
You will need savings not only for emergencies, but also for the expenses you know you are going to have, like that extra book your college professor will assign or repairs for your car. You will go broke relying on high interest rate credit cards to pay for these.

3. Look for ways to save money
Buying at shopping clubs and with coupons, looking for the cheapest gas price in the area, going to discount movie theaters and taking advantage of student discounts will mean extra money for the things you need—or money to add to your savings account.

4. Use cash, a debit card or a checking account instead of a credit card
People who use cash for their purchases spend less, so if it’s under $20 or you can eat it or drink it, use cash. Don’t totally buy in to the myth of the “plastic society,” because even if you use a debit or credit card responsibly, you will tend to spend more than if you use cash.

5. Avoid credit card debt
Remember, the best way to manage debt is to avoid it. Credit card debt at high interest rates, and with the likelihood that you will pay late-payment and over-limit fees, means that you will pay significantly more for everything you do and buy. Credit cards are not new money, free money or more money. They are just a loan you have to pay back.

Remember, if you don’t have any extra money in your budget to repay it within a reasonable time with interest, you can’t afford to incur the debt.

6. Pay your bills on time
One of the worst things you can do to your credit rating is to pay your bills late. This includes not only your credit card bill, but your rent, telephone, utility and cell phone bills.

7. Always pay debt off as quickly as possible
You should have only one credit card. Research the best card for rates and fees, and then don’t charge anything on it that you can’t pay for at the end of the month. If for some reason you don’t pay off your credit card bill in full, pay at least 10 percent of the balance. Never make just the minimum payment, and stop charging until you have paid off your balance.

8. Minimize your student loan debt
Before choosing a college and course of study, ask yourself if the job you are likely to get after college justifies the student loan debt you will incur for the degree you will get at that institution. Beyond that, keep your student loan debt to a minimum. Taking out a higher student loan amount than you need for luxuries like a spring break vacation may be something you regret after graduation when you have to pay the loan back.

9. Avoid debt-inducing activities
Stay away from impulse shopping online, expensive behaviors like gambling and drugs, opening multiple store charge accounts, more-than-three-year car loans, rent-to-own and payday loan establishments. Also, avoid all those solicitations to open credit card accounts to get “free stuff.” Those open accounts will hurt your credit rating even if you never activate or use them.

10. Remember the consequences of abusing credit cards and other consumer debt
Don’t lose out on a job, student loan, admission to graduate school, an apartment or car loan because of too much credit card or other consumer debt. Today, everyone is pulling credit checks and using them to make decisions about your future.

Hon. John C. Ninfo is a Chief U.S. Bankruptcy Court judge. For more great financial information, including an article about budgeting for college, check out the Credit Abuse Resistance Education (CARE) Program Web site, www.careprogram.us.

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10 tips for money mojo

Follow these budgeting tips to have enough cash for emergencies and savings.

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