Tag Archives: budgeting

Good Credit

– To maintain good credit – live within your means
Consumer debt is growing at an alarming rate. Sometimes it’s hard to see it coming before you suddenly find you’re a statistic.

Ask yourself these questions:
Is your spending out-of-control?
Do you feel like you’re in over your head?
Are you missing scheduled monthly payments?

If you answered “yes” to any of these questions, you may be headed for serious financial trouble – a bad credit rating that will follow you for years to come. It can keep you from getting things like a mortgage, a car loan, or even a job. It’s never too late to start on the road back. Harris County Federal Credit Union suggests these ideas to help you get started.

First, realize that you’re not alone
The Federal Reserve estimates that U.S. consumers are currently carrying a debt load that is 37% heavier than it was just five years ago. Recent world events have created a very unstable economy and many jobs have been lost. People are finding that it’s very easy to borrow more money than they can afford to repay.

Prepare a written budget, and then stick to it!
The best way to keep your credit good is to live within your means. It may take a while to establish a budget. You’ll need to track your spending for at least a month, maybe up to three months. Once you actually start recording your expenditures, you may spot some items right away that can be trimmed. HCFCU has worksheets and formulas that you can use to set up your budget.

Write down all your ongoing monthly expenses: rent or mortgage, car payment, utilities, loans, all the things you write a check for every month. Remember to add in groceries, gas and an allowance for emergencies like medical expenses or car repairs. Then subtract those expenses from your monthly income. This will tell you how much discretionary income you have.

Be diligent about making your scheduled monthly payments on time
Your credit rating- good or bad – will follow you for years to come. If your mortgage, auto loan or credit card account becomes delinquent, it’s noticed by credit reporting agencies all over the country. Paying on time lets creditors know you’re serious about maintaining your good credit, and that you are a “good risk” for future credit offers.

From your written budget, organize your scheduled monthly payments according to their due dates. Depending on when you get paid each month, determine which bills get paid out of each paycheck. As soon as you get paid, pay your bills first.

Credit cards – a double edged sword
It’s easy to get into financial trouble with credit cards. If you get to where you’re only able to pay the minimum amount each month, you need to put the brakes on your spending right away. The “minimum payment due” on your credit card statement may look like the easy way out, but it can take years to pay off your balance at that rate. Pay as much as you can each month.

On the other hand, responsible credit card use can help you break large purchases into smaller, more manageable monthly payments. For instance, if you need to replace your refrigerator, consider paying with a credit card so you can pay for it over a few months. Remember though, that you’ll be paying a finance charge on the unpaid balance, so decide up front how much you’re going to pay each month.

Bankruptcy should only be considered as a last resort
It will leave a bad mark on your credit for the next seven to ten years! Contact HCFCU for alternatives.

Help is available from Harris County Federal Credit Union
If you’re having trouble making ends meet, give us a call. There are many different ways we can help you manage your debt. We’ll look at your unique situation and help you find the best remedy.

Kids Can Budget Too!

How to Help Kids Learn Budget Skills to Last a Lifetime – 
Without a spending plan, finances can easily spiral out of control. This is why learning good budgeting skills as early as possible is so important. Helping kids set up a budget doesn’t have to be cumbersome; the experience can actually be fun.

Beginner Budgets
Kindergarten and early elementary school kids can grasp basic budgeting ideas. Start by introducing the concept of wants and needs: A new toy is something a child may want, but he or she may really need winter boots. Explain that money is what we exchange to get stuff, and we often have to save and wait for things we want in favor of getting what we need.

A small allowance gives kids something concrete to work with. Of course you provide their basic needs, but with even a small income, they can begin to finance some wants. Introduce savings by giving them four jars with labels like “spending,” “saving,” “investing” and “giving”:

  • Use the spending jar for cash that can be spent on small, everyday wants such as sweets or stickers.
  • The saving jar can collect money to be used for larger items like a new Lego set or doll. Let kids create and decorate wish-list posters to help reinforce their savings goals.
  • The jar for investing should accumulate cash for things kids might want in the more distant future.
  • The one for giving establishes a fund your child can use to help others.

Kids watch everything you do, so one of the best ways to teach them is to model responsible budgeting and involve them with planning and shopping. This is also the perfect age to introduce banking concepts. Bring kids with you to a financial institution like Harris County Federal Credit Union to help them learn how they operate. For instance, you can show your children that the money you get from a cash machine is limited to what you put into an account earlier.

Middle School Budgets
Kids in their “tween” years can try out some more complex budget concepts. Give your child a set amount of money to work with and let her take charge of planning a family trip to a water park, restaurant or petting zoo. She can research prices and decide what rides, entrees or activities are affordable.

Enrich budgeting skills by encouraging your child to keep spending records and to maintain a list of long and short-term goals. You may want to provide an incentive by matching savings for a special long-term goal.

When your child accumulates more than a few coins, she’ll need a safe place to keep it. Consider opening a joint account that will both reward her good academic performance as well as regular deposits. These accounts earn interest and give kids access to Googolplex, an interactive online tool that teaches financial literacy through stories and games. Tech savvy youngsters can also improve their money skills by downloading entertaining apps such as Allowance and Virtual Piggy.

Teen Budgeting
Teen budgets begin to approach those of adults. Encourage your teenager to get a part-time job and let him be responsible for some of his own expenses, such as his mobile phone bill or gas for the car. A young adult share checking account can also provide rewards for getting good grades in school and offer built-in training features to teach teens how to avoid overdrafts.

As your teen’s budget becomes more complex, look for free apps that can help keep her finances organized. By this time, all the experience and good role modeling you’ve provided will have your teen well on the way to becoming a financially responsible adult.

Roberta Pescow, NerdWallet