Avoiding Interest And Fees While Managing Debt

When you’re just getting started on your own, and you have mainly food and shelter to be concerned about, your financial life is actually quite simple. It is good to keep a tight, well-organized budget. At the same time you should also plan for larger expenses for a future that is not too far off in the distance. Your financial life may be quite simple in the beginning, but things may get quite a bit more complicated as you progress and you have to be ready for that both from a fiscal as well as a psychological point of view. You need to be ready before the fact and not surprised after the fact.

You presumably have a job, but your pay rate may not be exceptional and you may still be looking at alternative job possibilities that will pay better and perhaps provide you with better hours. You may be living with others, but you need money mainly to buy food, pay your share of the rent and utilities as well as money to do laundry and to eat out occasionally when there is no other option. You ride the bus, walk or bike everywhere. You also need to do your own laundry at the laundromat down the street from where you live. You have a bed and a room and a cell phone. The latter is set up mainly for free texting and to otherwise keep operational expenses to a minimum. When buying discretionary items watch for sales. Watch for and buy two for the price of one items.

Even while your financial life is reasonably simple it is best to keep a notebook to record ongoing expenses. Rent and utilities is a clear monthly expense. Set up a bank account and pay by check. Alternatively, establish a savings account and have a bank draft a check for the payment of rent and utilities at the appointed time each month. That a avoids the problem of having lots of checks you may not need. In that case apply for a credit card — usually you can do this through the bank. You can also get a genie card and that will allow you to access the funds in your bank when you need them in small amounts for groceries, laundry, transportation or other expenses.

On the credit card you may be able to start with a credit limit somewhere near the size of your bank balance. If you are paid at work by check direct deposit into your account at the bank may work well for you. Overall it may take a month or more to get to the point where you do not have to handle every transaction by cash.

Once you have a credit card you can charge everything, but still you must keep expenses to a minimum and you will need cash for some things. Nevertheless, for a while you will keep credit card charges low for a few months and pay the balance due each month before the end of the grace period noted on your billing envoice which will also have a record of charges. You will want to check these against your notes just to be confident there are no billing errors or mistakes.

After several months or more you may need to make slightly larger purchases. You may need a new bed frame, a small refrigerator or other items for your living quarters. Space these out over time such that they can be paid for within a few months. You will have modest interest charges, but you should always pay more than is minimally due each month. These small purchase and payments will help you establish your credit history.

Later, you will need to make larger purchases such as a new bed, an automobile, new furniture, or some other item which may be too costly to simply add to your credit card. You will need to establish credit terms with the person or establishment from whom you buy the item. This will be for so many months or years at a certain fixed rate of interest. If you have established your credit, you should be able to come to terms fairly quickly.

In addition, it may be that one or more or the items you seek may be available with no money down and drom six months or up to two years interest free or at low interest. You may have to pay a nominal fee with each payment even if zero percent interest is offered, but you mush be able to make the payments in a timely way or a penalty may be levied. If you can do this, your credit scores will again improve over time and thus bring yourself up to where even larger credit may be available to you to purchase larger ticket items such a an auto or a house with associated property.


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