With the state of the economy being rather poor these last couple of years, many people who once had good credit are discovering their credit is not what it used to be. Many financing companies know that and will dangle their offers to extend credit, and help you re-establish your credit rating, like a brass ring. But before you reach for it you should consider this: Are you ready to re-establish your credit?
Even with the best intentions, over extending yourself financially can really send you on a downward spiral, and if you haven’t made the necessary lifestyle changes chances are your poor financial habits will catch up to you as well. Before looking into credit fixes, you will need to take a hard look at yourself and most likely downsize your lifestyle.
To get started, you should look at your income versus all your expenses. Prioritize your expenses according to your needs. Your mortgage or rent should come first, followed by utilities, and food. Make sure about which utilities are truly something you need, and which ones are just a matter of convenience. Electricity and heat are pretty much necessary. Cable TV and sometimes even Internet access may not be. Phone plans can often be downsized as well. Highlight anything that you may be willing to give up, or reduce service on.
Look at how you are eating. Are your grocery bills as low as they can be? Everyone needs to eat, but if you are buying a lot of prepackaged convenience foods or eating food from restaurants this may be eating away at your budget. Are you checking store coupons for deals? Are you eating your leftovers before they get bad, or do you find yourself throwing out spoiled food? By planning meals carefully, and putting leftovers in the freezer that you might not want to eat within a couple days, you are likely to waste less and make the most of your food budget.
Look at the space where you live. Do you really need everything you have? There may be some things you can sell that could allow you to pay off some bills. Do you have more space than you need? A room mate might be something to consider. By living with someone else, even temporarily, you can share common expenses, which will leave you room to pay off bills.
Once you have established a truly bare bones budget, and are making more of your payments faithfully, you can start to negotiate lower interest rates for some of your bills.
For many people, coming to the realization that your expenses are higher than your income can be daunting. No matter how many credit offers you get, it’s important to remember that borrowing without an assurance that you can repay the debt causes more trouble than its worth.