AICCCA Advises - Make Managing Your Money
the New Year's Resolution You Keep
Fairfax, VA - January 5, 2006 — A list of New Year's resolutions is a time-honored tradition that most people make but do a poor job of keeping. AICCCA advises consumers to keep their resolution lists short and make managing their finances a priority for 2006.
Americans are in ever-increasing amounts of credit card debt - the average is now close to $9,000 - and several factors are in place in 2006 that could make for financial disaster for anyone with problem debt. The Bankruptcy Protection Act went into affect in October 2005, which can make it more difficult for consumers to qualify for bankruptcy protection, the minimum payments due on credit card balances has increased by as much as double in some cases and interest rates are increasing, making it more difficult to use home equity as an inexpensive loan to get out of debt.
"Now is the time to gain control of your finances, pay off excess debt and begin to live within your means," said Dave Jones, president, Association of Independent Consumer Credit Counseling Agencies. "The best offense when it comes to avoiding financial problems is to commit to managing your money - including saving for emergencies and eliminating expensive credit card debt."
To help, AICCCA offers the following New Year's resolution financial management tips:
Know what you owe. Start by getting copies of your credit reports from the three major bureaus and reviewing them for errors. Then get all your bills together, credit card statements, loan statements, utilities, everything and determine the total amount that you owe. It is important to know exactly what is required in expenses each month and year. If you owe more than you earn each month, that needs to be remedied quickly.
Stop charging. Many people use credit to extend their incomes. If you are among this group, begin now to cut back and learn to live on only the income that you earn. Take your credit cards out of your wallet so that they are not available when you are shopping and stay off the Internet shopping sites.
Create a plan. Just a simple written plan of how you will allocate your income is all you really need. Start with your fixed expenses such as mortgage, car loan, etc. and then add other categories for your other spending. What you want is a clear idea of where you will spend your money each month.
Start saving. Begin building a savings cushion of three to six months of living expenses. It may take you many years to accumulate that much, but start with an
amount that you can afford now and increase it as you move forward. Having a savings cushion provides you with needed funds when life happens and you need additional money for items such as car repair, appliance replacement or other large expense. Most importantly it keeps you from placing those expenses on a credit card.
Pay off debt. Make it a priority in 2006 to pay down your credit card balances as quickly as possible. The pizza that you ate in 2004 may have cost you three times as much as the retail price if you charged it to your credit card and have not paid the balance in full. Look for ways to trim expenses to free up an additional $50 or $75 to put towards your highest interest balance. Paying only that much above the minimum payment can make a huge difference in the amount of time it takes to pay off the balance.
Keep track. Commit to spending some time each week or whatever time frame works best for you to manage your finances. Check to make sure you are making payments on time each month to each of your creditors. Review your monthly statements to assure that payments are applied correctly and that you do not have any erroneous charges. Continue to assess your monthly spending and add money to your savings and debt repayment when possible.
If your financial situation is overwhelming, call an AICCCA member for professional credit counseling at 800-450-1794 or visit the website at www.aiccca.org.
Founded in 1993, Association of Independent Consumer Credit Counseling Agencies (AICCCA) is a national membership organization, established to promote quality and consistent delivery of credit counseling services. AICCCA and its members are focused on improved creditor relations, efficient processes and advanced technology to best serve clients and creditors. AICCCA members are independent nonprofit agencies that advocate for debtors, counsel millions of consumers annually nationwide and provide debt management services to consumers with excessive unsecured debt. For more information or to contact an AICCCA member office call (800) 450-1794 or visit www.aiccca.org.
