Credit Repair Company Has the Answers for Those Struggling to Create a Budget for 2018

(Newswire.net — January 30, 2018) North Salt Lake, Utah — With the start of a new year, many individuals look to set money management goals that will get their finances back on track — but creating a budget can prove to be a daunting challenge. Lexington Law, a consumer advocacy and credit report repair firm, is seeking to help individuals better understand what they need to do to create a workable budget for 2018.

As John Heath, directing attorney at Lexington Law explains, “Creating a budget is about much more than trying to limit how much you spend each month. Ideally, individuals and families should take a big-picture approach to their finances. This means taking steps to pay off debts and improve their credit score.”

Improper use of credit cards is one of the biggest factors preventing individuals from budgeting effectively. It can become alarmingly easy for consumers to simply swipe their credit card without giving much thought as to how much they are actually spending. As Heath notes, failure to track credit card expenditures is where a lot of consumers get in trouble.

“If you aren’t paying close attention to how much you’ve spent on your credit card, it’s easy to go over your spending limit,” says Heath. “This could cause your credit card company to freeze your account, which can impact your credit score. When this happens, some people give up on paying off their credit card debt, and then the real trouble starts.”

Late payments and accumulating interest charges in particular can have a profound impact on individual budgets. In extreme cases, someone who puts off paying their credit card debt may even be subjected to a charge-off, which turns the credit debt over to a debt collector. Late fees and charges from credit collection companies can add to the stress and challenge of creating a monthly budget.

To avoid these problems, the attorneys at Lexington Law recommend that individuals with credit card debt incorporate a debt repayment plan as a central part of their monthly budget. Interest adds up on unpaid credit card balance, so each dollar extra an individual can put toward paying off these debts will reduce their long-term costs. Families with multiple credit cards should focus on paying off cards with the highest interest rate or smallest balance first.

Of course, to truly address credit card debt in one’s 2018 budget, individuals need to start by taking control of their spending habits. The allotted amount for monthly spending should never exceed household income levels, as this will only create more debt.

“If you have credit card debt, you need to set a goal for how much of your debt you’re going to pay off each month,” Heath explains. “You should take note of payments that you can’t afford to miss, such as your mortgage or rent and utility payments, then build the rest of your monthly budget around these areas. Focus on the necessities, and don’t be afraid to cut costs where you need to.”

The team at Lexington Law advises that individuals struggling to create a budget break their spending down into smaller categories, such as food, transportation and entertainment. Setting a spending limit for each area and then physically tracking expenses (including charges made on a credit card) ensures that spending doesn’t get out of control. Tracking expenses manually is one of the best ways to identify and correct poor spending habits.

It is strongly recommended that individuals attempting to pay off credit card debt look for areas where they can cut costs. This might involve packing a homemade lunch instead of buying food from the office cafeteria, or even cancelling a cable TV subscription.

Ideally, Heath notes, making reasonable cuts to a household budget should ensure that families have extra money left over at the end of each month to save for emergencies or help pay off existing debts. This creates a more stable financial situation, while also helping the family improve their credit score for future needs. The budget shouldn’t be tossed aside once debts have been paid off, either. By continuing to track and manage expenses in accordance with their established budget, individuals can avoid getting back into credit-related financial trouble.

For individuals facing a charge-off or other severe credit-related problems, Lexington Law can provide assistance to ensure that past credit mistakes don’t cause further financial difficulties. By taking action to repair one’s credit reports, individuals can enjoy lower interest rates on mortgages, auto loans, and other major purchases. Establishing a budget and paying off credit card debt is the first step toward a better credit score and a more secure financial future.