How Much Credit can you Afford?

How Much Credit can you Afford?

Before taking the decision to add more debt, make sure you:

*Allocate sufficient money for your essentials.*

*Borrow only for items that you need and can afford. *

*Borrow only if you're spending less each month than you take home. *


1. Start with your monthly take home pay.

This amount is left after taxes and other deductions were made. You must ensure that:

2. Subtract the amount you need for necessities and fixed expenses. 

This includes savings, mortgage payments or rent, utilities, food, transportation, child care, medical care, clothing and recreation. Include payments made quarterly, semiannual or annual insurance and taxes.

3. Subtract monthly payments for existing loans and credit cards.

4. The balance is the amount you can safely apply to debt repayment. 

Do not think you can spend all this amount, since emergencies do occur, and might want to use a regular savings account to cover small unexpected expenses.

Monthly Take Home ---- $ ____________
Fixed Expenses ---- $ _______________
Loans/Credit Cards ---- $ ______________
Amount Available For Additional Debt ----- $ _______  

Moral :  If the intention of buying a new home or car, pretend you have already done and begin to "make payment", but himself in a few months, you really know if you can afford and you will have some money set aside for repairs, etc. when actually make the purchase. If you can not make the payment claim, certainly not able to do consistently real. It's back to the drawing board and understand what you are willing to give up to get the new debt. 

HOW TO MANAGE CREDIT CARD USE 

Many people find themselves with credit problems because they do not keep track of purchases made with credit cards. A simple method of keeping track of monthly credit card:

1. Determine the total amount you can responsibly charge on all your credit card accounts during that month.

2. Keep track of your credit spending in the same way you maintain a running balance of your checking account.

3. Subtract each amount charged from the monthly charge limit you set.

4. Stop using your credit cards if you draw this balance down to zero.