When you have bad credit, it can feel like you’re doomed to a life of financial failure. Guess what: you aren’t! Bad credit is absolutely something from which you can recover. It might take some time and it will definitely take hard work, but it is absolutely doable. You just have to put together a budget and stick to it. Here are some tips to help you do that:
If you have bills that are past due and you need help paying them regularly, it might be helpful to take out a loan. Your bad credit might keep you from taking out a bank loan, but there are financial companies out there, like Crest Financial and others, that specialize in short term loans for people whose credit is less than stellar.
If you do decide to consult with CrestFinancial.com, make sure that you do not borrow more than you can afford. Bad credit loans tend to have very high interest rates and you don’t want to wind up paying back more than necessary.
The Envelope Method
If you aren’t used to following a budget or have a difficult time keeping track of your income and savings, using the “envelope method” can help you develop those habits. The envelope method is very simple: you create an envelope for every bill or expense listed in your budget. This includes creating envelopes for budget items like “groceries,” “fun money,” etc. Portion out your paychecks and income according to how much you’ve listed on your budget. Then pay bills directly from those envelopes. When there’s no money left in the envelope, you can’t buy anything else in that category. The easiest way to do this is with cash but there are digital apps that can help you here too.
Create Your Own Numbers
Everybody knows that they need to pay more than the minimum amount due on their bills if they want to actually pay off their debts. But how much more is enough? Even $10-$15 more is good but, if you really want to pay down your debts quickly and fix your history of bad credit, you need to offset whatever interest is charged to your accounts. Look at your monthly bill. Add together the minimum amount due, how much you’ve been charged in interest and then add another 10% onto that amount. You’ll be amazed at how much faster your debt shrinks when you use this method.
Bringing in Extra Income/Reducing Your Expenditures
It’s vital that you pay your bills on time every single month. This, more than anything else, is what will help you fix your bad credit history and raise your credit score. If you aren’t earning enough through your current job, you’ll want to find a couple of ways to bring in some extra cash while you also work hard to reduce what you spend. Driving for Uber, for example, can bring in extra money in your “spare” time and using Groupons can help reduce what you spend. There are many different approaches you can take here. Start exploring and choose the methods that work best for you and your family.
Check around your local area to see if you can find the things you need for free. You’re probably already great at shopping on Craigslist, but what about checking out your local Buy Nothing group? A quick search will turn up plenty of groups that are dedicated to helping their members get the supplies they need for as little money as possible. Take advantage of these groups so that you’ll have more money to allot toward your bills.
These are just five of the methods you can use to make creating and sticking to a budget much easier on yourself and your family. Over time, as you stick to this budget your credit score will go up and you reduce your risk of finding yourself in this same predicament in the future.