If you are one of those who have ever used the expression ‘blur and new account’, these lines are for you.
Starting from scratch can help us in many aspects of our life: it allows us to abstract from a situation, analyze it from the outside and make decisions with a totally clear mind.
If your numbers have turned against you and you don’t know how to manage your personal finances, we propose an explosion that blows them up. When only ashes remain before your eyes, you can think more clearly and resurrect your economic planning like a phoenix.
None of your financial decisions
Not even the worst, they have to become a drag for life. You may regret buying the car in installments or do not see clearly what went through your mind when fixing your mortgage, but do not let that prevent you from being creative.
Find the reset button and press it.
It is the time of the second -or third, or fourth-opportunities. They work, word of Good Credit!
From chaos to order
The first doubts about whether we are managing our finances correctly appear in the thirties, a phase more calm and focused than when we are twenty years old.
We started to manage ideas about credit, the need for budgets and – hopefully – we thought about starting to really save: Getting married. Buy a house. Have a child.
Such vital decisions need a communion with our financial situation. If we are threatened by the idea that “we cannot afford” this or that change, perhaps it is because we are not making the best decisions regarding our numbers … But that may change.
After assessing the picture and doing damage control
How to do it? In Good Credit we propose two simple steps that can help you turn the mess into a good financial roadmap.
1) Analyze your life train point by point
A study of the Magazine Index figures in 833.905 million euros what the Spaniards spend each year on food, clothing, housing, health, transport, … In the study they collect a graph that shows in which items we invest.
The two concepts that generate more expenses in the economy of the Spaniards, for which we allocate the same budget, are housing, water, electricity, gas and other fuels (17.7%) and hotels, cafes and restaurants (17.7%).
It is followed by an investment of 14% of the budget in food and non-alcoholic beverages, followed by 8’6% in leisure, entertainment and culture. The average Spanish uses 5’4% of their budget to dress and put on their shoes and 2’8% go to alcoholic beverages, tobacco and narcotics.
Do you see yourself reflected in that statistic? If you believe you should balance your current expenses in another way, you will have to review your consumption habits and discern very clearly between needs and luxuries.
You can view and evaluate your own diagram using online tools such as Good Credit to see which categories you spend more each month. This is the first step to creating a budget adapted to your REAL situation. Do not worry, if you go hand in hand with some expense, Good Credit already takes care of notifying you to get you back on track.
2) Face your debts
You know what you spend more and less on, but what part of your income do you pay off each month?
According to date from the National Association of Collection Management Entities (ANGECO), each Spanish household accumulated an average of 2,900 euros of debt at the end of 2012.
This means that there is always a part of our income that we must ‘reserve’ to end our obligations and the interests they generate, whether it is a ‘pending account’ with our bank or with an SME.
A good advice is to settle that debt in the short periods as possible – it is best to think in margins of 3, 6 or 12 months – and be aware of your spending possibilities until you leave that burden behind.
If to get control of your debt you need to ‘banish’ one or more credit cards from everyday use, do not hesitate to do so.
Strategies against panic
Yes Yes. We know. You start analyzing your accounts and begin doubts and fears, don’t panic! There is ALWAYS a solution to redirect your financial situation. Press the Big Bang button with these two steps:
1) Create an emergency fund NOW. Do not let any unforeseen, however, turn upside down all your efforts to rationalize your expenses. The amount you must allocate to that fund will depend on the needs you have in your day to day. Experts recommend saving enough to cover 3 to 6 months of your fixed expenses.
2) Cut spending, even if it hurts. Maybe you have to slow down, dose your trips, trips and little whims. Establish a small quarantine to all those stores and raise it some time later. You will see how your finances breathe.
With these two decisions you guarantee parenthesis in your financial concerns. Do not forget to keep ‘fit’ your expenses and income with Good Credit! The tool lets you know how much money you have at every moment and you can follow the evolution of your expenses from wherever you are. Knowledge is power!