As a credit counselor, I met with hundreds of consumers to discuss their debt and personal finances. Over time, I noticed some budget-busting trends that derailed even the most well-intentioned plans. While our spending should be tracked and accounted for, some of the most common areas of concern include:
Home: Overextending the budget with cash-out refinances or second mortgages is a common trend and one that can take years to correct because it is a long-term loan. Especially when nearing retirement, refinancing should be avoided unless you’re sure that the new payment can be maintained for the long-haul.
Auto: A family or couple committing themselves to two new car payments at the same time can experience a real drain on their finances. Ideally, most couples should agree to only have one new car payment at a time, if at all. Today’s cars run much longer, so buying used is a more viable option than in the past.
Taxes: Particularly for the self-employed, this category can lead to financial strain, but even those on a payroll can find themselves in a pickle if they do not have enough money withheld, or if certain taxable events occur.
Non-essential spending: From holidays to retail therapy to eating out, discretionary spending is one of the most common thwarts to a spending plan. Unplanned large purchases like a flat-panel TV or new furniture can sound appealing with the free financing that is often offered, but unless there is a specific plan to pay down the debt, it can become a monster when the accrued interest is added to the balance and the APR is increased.
Help is available thru certified credit counseling agencies, such as our CCCS. We can work with you, your budget and your debt to help you regain financial stability.
