How Women Can Fix Their Credit Before Applying for a Job: Part 2 — Debt and Budgeting

a guest post by Michelle Dunn

(www.bizchicksrule.com) — Earlier today, we talked about credit reports and credit scores. Now, let’s talk about managing your money.

How can I increase my income to pay more on my debts?

When I was getting divorced I ran into a bad situation and turned to a credit counseling service that was a scam and I spent money I didn’t have that never went towards any of my debt. Be very careful of credit counseling services, make sure they are non-profit and check all of their references, including the better business bureau. Talk to some of their customers and make sure they are legitimate.

You may not be able to increase your income (unless you get a second job), but you can increase your available resources by cutting back on what you’re spending. Some of the things I did to increase my resources were to cancel many things I had but that weren’t necessities. For example, cancel cable television, cancel cell phones if you won’t be charged an early termination fee, or cut back on all the bells and whistles such as call waiting, call forwarding, caller ID or anything you can live without, and we can all live without a lot more than we think.

Use coupons on the grocery store, carpool to work, stop going out to eat and bring lunch and coffee from home to your job. Don’t renew magazine subscriptions. Utilize your library for books, magazines and even the internet.

A great way to see how much you will add to your resources is to try this simple exercise. Just do this for one month and you will truly be amazed at how much money you spend on little things here and there. For example, I used a small notebook and kept it in my bag, write the date at the top of the page and every time you buy something, write it down. I did this and wrote down when I bought a coffee, newspaper, magazine, candy bar, gum, gas, extra minutes on your cell phone.

You will really be AMAZED at how much this all adds up to, I am a frugal person and my extras added up to what I could make at a part time job! Now once you do this, don’t start spending that money on anything but your debt, use it to pay off any bills you have and you will improve your credit and your state of mind tremendously. Being in debt is stressful.

What is a budget and how do I get one?

Women hear the word budget and cringe. A budget is not something to be afraid of — it can help you tremendously. Starting a budget can be as simple or as involved as you want to get. Let’s talk about an easy budget you can start right now.

1. Get out a notebook and make a list of your monthly expenses, include EVERYTHING you spend money on.
2. Subtract the total expenses from your earnings. Do you have money left at the end of the month or are you looking at a negative number? If you’re looking at a negative number, go back to your list of expenses and see what you can cut back on, like cable television or going out to eat.

Then, try to live within that budget. Once you can live within your budget you can add things to your budget such as using the money you save from all the extras to pay off debt. You can add things such as savings, investments, vacations or anything else you want to have money for.

Remember, you have to be realistic, if you absolutely cannot bring coffee from home and have to have coffee everyday from a coffee shop, add that into your budget. If you’re not realistic or deprive yourself you will not be successful.

How can I stay out of debt?

• Don’t use credit cards. Instead, use your debit card so you are using only money you have.
• Pay with cash or your debit card whenever possible.
• Live within your means.
• Avoid “buy now, pay later” types of offers.
• Cut back on something in your budget to increase your available resources.
• Save money for things you want to buy instead of buying it on credit.
• Keep a budget, and change it when you need to but always follow a budget.

***

Michelle Dunn, author of an award winning book, one of the Top 5 Women in Collections in 2007 & 2008, one of the Top 50 Most Influential Collection Professionals of 2007 shares her hard-won expertise on debt collection with the titles in her “Collecting Money" series. She is the founder and president of Never Dunn Publishing, LLC and her 10-year-old Credit & Collections Association with thousands of members. Michelle started and ran M.A.D. Collection Agency for 8 years and has worked in the debt collection industry for 20 years.

(image: SXC.hu)

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