Building a Budget – Don’t Let Debt Topple Your Financial House
The biggest danger to a stable financial house is debt. Too much debt and too many bills can ruin the budget you’ve built. In this video, you’ll learn how to use your budget to keep debt in control, so it doesn’t topple the structure you’ve constructed.
One big danger to a financially stable house is debt—especially open credit lines like credit cards and personal lines of credit.
These types of credit make it easy to keep adding expenses that don’t fit in the financial framework you built with your budget.
You keep tacking on lots of extra additions to your financial house that your income can’t support.
And while the structure may seem stable, these expenses can put extra strain on your foundation if you are not paying them off correctly as the interest makes their amount heavier.
One small, unexpected event and your financial house can topple.
So, it’s important to stick to the budget framework that you set.
Your expenses always need to fit on the foundation of your income.
And don’t let credit trick you into building out more and living beyond your means.
Instead, credit should be used to enhance your financial framework.
For example, you can use rewards credit cards to pay for things like groceries or gas in the budget that you already have set.
But because those expenses are already set within the framework of your budget, you can pay off the credit card bills in full every month.
That way, you’re not adding on extra bills with debt that you can’t afford to pay back.
Plus, those earned rewards or cashback will make it a bit easier to keep your budget sturdy or add something you wanted to your financial house.
And if you already have debt, you should build paying it off into your budget.
Set a fixed amount that you can afford to pay each month.
Then use that to gradually pay down the debt you owe every month so you can reduce its strain on your foundation.
That way, your financial house can be even stronger.
