Jun 21, 2012

How overspending can ruin your financial life?

With today’s expenses and their prices, it can be very hard not to overspend. Still, that isn’t an excuse to stray out of your budget. You know why? It is because overspending can only lead to more problems than you think. Overspending can affect your whole life. With all the possible consequences, it may jump to one problem to another.

Unpaid bills

All the excessive shopping with your credit card can cause steep bills at the end of the month. If you keep on using your credit but don’t have enough money to pay for it the end, then you’re surely in for a huge financial disaster. This will turn out to be missed payments, and missed payments will ruin your credit report. Missing out on payments will get your credit report marked for 7 years or more. And you can’t get rid of them by finishing them off.

Credit report

Overspending can cause a chain reaction of events. Once you get your bills due to overspending, it’s possible for you to miss out on payments. Those missed payments will be recorded in your credit report, and before you know it your credit score is going down with you too. As we all know, your credit score is your pass to banks and dealers. It can get you approved loans and cheaper deals out in the market. While a low sore will have you troubled in getting the creditors approval and trust.

More debts

Always remember that once you spend your money, it’s gone for good. Your money needs to be budgeted every week or month. If you spent your money for the whole month, there will be nothing left for you to pay for those bills. Most people result to borrowing more money just to get by, and borrowing money means that there is an interest and the longer you don’t pay, the bigger it gets; the more trouble you are in.

These are just a few of the problems that overspending can give you. Even if you have tons of money to spare, why not teach yourself a thing or two about financial responsibility. You can follow the following steps to avoid ruining your financial life:

Stay on a budget – Keep a check on your budget when you’re going out to shop. Make sure you have a plan and if possible, always list the necessary things that you need to buy and keep it that way only. Avoid buying stuff that is not on the list so that you won’t go out of your budget.

Monitor your credit report – Check your credit report at creditreport.com regularly. The credit reporting site will help you monitor your credit report along with your credit score. You can monitor your credit report for your pending bills, credit balances and your credit history. This will keep you in check on how much you should spend and how much to save.
Know your limits – When you are going to use your credit card for shopping, make sure you know your credit limit before spending. List down all the things you need to buy and compute the expenses ahead. This will help you in controlling overspending and managing your finances.

You can learn a lot from budgeting, keeping track of your expenses with your credit report and staying below your credit if you practice it. Save your money for the important things and spend it on your needs. Your wants are always there and it can wait.

Joy Mali is an active blogger and shares extremely interesting financial management tips over the web that encourages people to check credit score regularly & to build a working credit report for a happy financial life.

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