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Consumer Finance Tips 
 
Consumers are constantly bombarded with new ways to spend money or get the credit needed to make large purchases. If you develop bad consumer finance habits, then you could be facing debt collection and bankruptcy within the span of just a few years. The important thing to remember is that credit and financing are not bad things. Credit and financing are actually extremely important to securing the things that you need in life, such as a home, furnishings, and a vehicle. Credit cards are useful in emergency situations and can also be helpful in planning vacations. The key is to implement spending rules that help you to avoid taking on more than you can afford and help you to keep your spending under control.
 
There are several consumer finance tips that you can follow to help maintain a healthy credit balance and avoid going into debt.
 
Your Credit Report. Your credit information is important to ensure that you get the lowest possible interest rates on loans and other contracts. People sometimes forget how important it can be to monitor your credit information and make sure that you have the highest score possible. One point off the interest rate to a mortgage can save you thousands of dollars over the course of the loan.
 
The federal government mandates that the three major credit reporting agencies provide every American consumer one free copy of a full credit report every 12 months. Contact Trans Union, Experian, or Equifax to request your free credit report immediately. Analyze your reports and follow the dispute procedures to alert the credit reporting agencies to any errors. Monitor any changes to your credit with Life Lock which will alert you to any adverse activity.
 
Use Credit Wisely. Contrary to popular perception, it is good advice to tell someone to get a credit card if they can be responsible with it. Credit cards can be used in case a weather emergency has you in need of a rental car or hotel room, and they can be helpful when you get a sudden large expense such as a car or home repair. Never spend more on your credit card than you can afford to pay down in two months or less. In emergency situations, you may not have the luxury of being able to pay the balance off quickly. If that is the case, then develop a plan for applying extra money to your credit card until it is paid down. Always maintain a balance of no more than 30% of your available balance on your credit card at all times. This helps to build your credit rating by showing that you can maintain a credit card without using the entire balance.
 
Develop a Budget. The smartest piece of consumer finance advice you can get is to develop and use a monthly spending budget. Spend a month logging your spending to determine what you spend your money on, and then combine your spending with your monthly bills to determine your liabilities for the month. Put that on paper and compare it to your monthly income to develop a personal spending plan. Analyze your budget to find ways to lower your spending.
 
For example, instead of buying lunch out each day you should take your lunch to work. This frees up more money for an emergency savings account or to apply towards paying off debt. Your monthly income and spending is dynamic, which means that your budget should be dynamic as well. Anticipate any one-time bills you will be getting for the upcoming month and re-arrange your budget to accommodate them. Set aside a certain percentage each month in savings for emergency needs, vacation planning, or holiday gifts.
 
Know Your Options. Even consumers with the best intentions get caught up in the credit spiral and start to get into debt. There are a few options you can use to help you reduce your debt and get back on budget. Debt consolidation is an excellent way to lower your debt interest and monthly payments. Avoid getting involved with debt consolidation firms that charge fees for their services. Talk to your bank about a personal loan to help consolidate some of your debt, or discuss the possibility of using a home equity loan to pay off your debt.
 
Another option you have is debt negotiation. If you have allowed a credit account or two to get out of hand to the point where you are having problems paying the monthly minimums, then it is time to talk to your credit companies. Negotiate a pay-off amount that will allow you to pay off your card with a monthly payment you can afford. More often than not, the credit company will insist that the account be closed and no longer available to be used. But this can stop the damage being done to your credit rating by a delinquent credit account and is an option you should consider. Consumers need a good plan to help avoid burdensome debt. Once you have worked to develop good spending habits, you will find that you have the cash you need to pay your bills and buy the things you need.

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