Category Archives: credit

Repair Your Credit

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Learn about credit
reports, how to repair inaccuracies and where
to order your credit
report.

When you apply for a personal loan,
credit card, or mortgage, your lender usually orders a report that
contains information about your credit file. This allows them to
look at other personal information in addition to the data you’ve
already supplied them in the credit application.

What is a Credit Report?

A credit report is simply a document that outlines your credit
history. The report contains details of your last residence,
employment history, payment history, whether you’ve declared
bankruptcy, and other personal information relative to your
finances.

Credit reports are made available by what’s known as a
"consumer reporting agencies" and the most common type
is a credit bureau. By collecting important personal financial
data, they make your credit history available to lenders, credit
card companies, insurance companies, department stores, employers
[with your consent], mortgage companies, and even landlords.

Credit bureaus make a profit by collecting and selling your
personal information. They comb public records to see if you have
any previous foreclosures, tax liens, or court judgments against
you. They combine this information with your payment habits to
form a summary of your credit history. Creditors or lenders then
evaluate your report and determine if you meet the right criteria
to qualify. 

When should I check it?

Your ability to get a loan or other credit rests on the accuracy
of this report – so it’s recommended that you get a copy of your
report at least once a year to make sure your credit information
is correct.

Generally, if you’re thinking of buying a new home, car, or maybe
applying for a new credit card, taking a peek at your credit
report beforehand isn’t such a bad idea. As a matter of fact, it
will give you an opportunity to correct mistakes or at least
lighten the amount of damage that could be done to your credit.

How do I order a credit report?

You can get a copy of your credit report from one of the three
major credit bureaus listed below.

Your report will usually include the following: credit inquiries,
bankruptcies, payment history, previous creditors, credit account
information, personal identifying information, and any other
information related to your credit history. The pricing per copy
is variable, depending on the reporting agency.

If you’ve
1)  been denied credit because of information in your credit
report
     (request within 60 days of denial)
2)  you receive public assistance
3)  you’re unemployed and intend to apply for a job
4)  your report is inaccurate due to fraud
5)  you’re a resident of a qualified state, or
6)  you haven’t requested a copy in the previous 12 months,
you may
     be entitled to a free copy of your credit
profile.

Include the following with your request:

Full name (including Jr., Sr., II)
Spouse’s first name (if married)
Social security number
Current and previous addresses within the last five years
Current employment information
Telephone number (home)
Date of birth
Signature
Any fees

Credit Bureaus

Contact each of the three major
credit bureaus:

Equifax
– www.equifax.com
To order your report, call: 800-685-1111
or write: P.O. Box 740241, Atlanta, GA 30374-0241

To
report fraud, call: 800-525-6285 and write:
P.O. Box 740241, Atlanta, GA 30374-0241
Hearing impaired call 1-800-255-0056 and ask the operator to call
the Auto Disclosure Line at 1-800-685-1111 to request a copy of your
report.

Experian
– www.experian.com
To order your report, call: 888-EXPERIAN (397-3742)
or write: P.O. Box 2002, Allen TX 75013

To
report fraud, call: 888-EXPERIAN (397-3742)
or write: P.O. Box 9530, Allen TX 75013
TDD: 1-800-972-0322

Trans
Union – www.transunion.com
To order your report, call: 800-888–4213
or write: P.O. Box 1000, Chester, PA 19022

To
report fraud, call: 800-680-7289 and write:
Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92634
TDD: 1-877-553-7803

There are also a number of smaller bureaus or "local
affiliates" who can retrieve your credit report. They receive
information from one of the major bureaus listed above.

We recommend these online agencies:

OnlineCreditInfo

Protect your Credit

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Ten Ways You Can
Protect Your Credit

1) Sign It
Ensure that you sign the back of your new credit card
once you receive it.

2) PIN
Never write down your PIN number in a purse or wallet —
memorize it or stash it in a safety deposit box or other safe
area. Make sure your PIN number isn’t something obvious like a
date of birth, address, or phone number.

3) Return It
Make sure merchants return your credit card after a
purchase. Don’t be in a hurry or let other distractions keep you
from getting your card back immediately.

4) Watch It
Never leave your credit cards unattended or in visible
sight of others. Remember, they are the same as cash.

5) Be Wary
Never give your account number over the phone unless
you’ve validated the company or individual you’re speaking with.

6) Check Purchases
Always verify receipts from purchases and make sure the
right amount has been charged. Take all copies of receipts and
carbons with you, especially ATM transactions.

7) Trash It
Dispose of receipts and old credit card statements
privately not publicly. Use a personal shredder or other device to
ensure your name and account number are unreadable.

8) Report It
Contact your creditors immediately if your credit cards
have been stolen or lost.

9) Record It
Make a list of your credit card account numbers and
telephone numbers of creditors in case your cards are stolen or
lost. Keep the list in a safe place.

10) Verify
Check your credit statement right away when it arrives.
Verify the amounts of purchases with sales receipts you’ve saved
for the month. Report any discrepancies to your creditors
immediately.

If you believe yourself to be a
victim of credit card fraud, get a copy of your credit report.
Call the fraud division of all three credit bureaus and have them
put a fraud alert on your file:

Equifax: 1-800-525-6285
Experian: 1-888-397-3742
Trans Union: 1-800-680-7289

The thief who has used your credit
card may try to get your credit report in order to use other
accounts of yours or to open new accounts in your name. A fraud
alert will prevent new credit accounts from being opened without
your express permission.

If the fraud was perpetrated as part of a business scam, contact
the National Fraud Information Center: 1-800-876-7060

Get
your credit report online right now – click here

Manage Debt (part 3)

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Ten Ways You Can Pay Off Your Debt (part – 3)

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9) Borrow From Your 401k:

Check the literature of your employer’s retirement plan to see if
you can borrow against your 401k balance. Most plans allow you to
borrow up to 50% of the account’s value of $50,000, whichever is
lower. In most cases, you’ll have up to five years to pay the loan
amount back and the interest rates are reasonably less than credit
card rates. The good news: you not only borrow from your account
but the interest you pay also goes back into your account, not the
lender’s.

Before you pursue this strategy, take a look at a few of the
disadvantages:

  • You lose the earning potential
    of the money you borrowed.

  • The interest that you pay on the
    loan is deducted from your paycheck with after-tax dollars.
    The interest will also be taxed again when you withdraw money
    from your 401k.

  • If you leave your employer
    before your loan is re-paid, the entire balance on the loan
    may be due in a short period of time. The balance of the loan
    will be reported as a distribution to you and will be taxed as
    ordinary income. If you’re under 59 and 1/2 you will be
    subject to a 10% early withdrawal penalty as well.

.
10) Talk To A Credit Counselor:

If you feel you can’t negotiate with creditors on your own or your
debts are just getting out of control, there are many credit
counseling services out there that can help you. One of the best
known is the  National Foundation for Consumer Credit (NFCC).
The NFCC is a network comprised of 1450 non-profit community
organizations (most use the name Consumer Credit Counseling
Services or CCCS) spread across the United States. 

Certified counselors at CCCS will examine your financial
situation, help you develop a spending plan, or just answer
general questions about money management. If you have severe debt
and your situation warrants, you may be able to enroll in their
Debt Management Plan (DMP). In this plan, you agree to deposit
funds into a CCCS account each month. CCCS distributes payments to
creditors according to the proportion of debt owed to each. They
also contact your creditors to ask for lower interest rates, lower
monthly payments, and waived finance charges. It will take
approximately 48 months to repay debts through the DMP and when
you have completed your payments, CCCS will help you re-establish
credit.

A few things you should know when dealing with CCCS:

  • CCCS is funded with voluntary
    contributions from creditors.

  • Up to 15% of your DMP payments
    to creditors will come back as voluntary contributions to CCCS.
    Your accounts with creditors, however, will always show 100%
    payment.

  • CCCS and your creditors will
    discuss many options but they’ll never mention bankruptcy as
    one of them.

  • If you enroll in the Debt
    Repayment Plan from CCCS, make sure you follow through. Missed
    payments or a hesitancy to keep up with the plan may show up
    on your credit report as an uncollected debt. Not good.

If there are no CCCSs in your area,
the NFCC recommends asking the following questions to help choose
a qualified credit counseling service:

  • Is this agency a non-profit
    organization?

  • How much will these services
    cost?

  • Are agency services
    confidential?

  • What counseling services are
    offered?

  • Are the counselors qualified?
  • Are budget and credit education
    opportunities offered?

  • Will my funds be protected?
  • Is the agency accredited?

If your debts are too high to
make the CCCS plan work or you’ve exhausted all other options,
then you may want to explore bankruptcy as a last resort.

To contact the NFCC:

National
Foundation for Consumer Credit
8611 Second Avenue (Suite 100)
Silver Spring, MD 20910
1-800-388-2227 [24hr automated listings]

Or look under "Credit and Debt Counseling" in the
business pages of your local telephone directory. The NFCC also
has a member
office locator at it’s web site that
will allow you to find the NFCC member organization nearest you.

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Manage Debt (Part 2)

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Ten Ways You Can Pay Off Your Debt
 (part – 2)

5) Transfer
Debt To A Low-Interest Card:

If your low-interest card hasn’t been maxed out, and your creditor
allows, you should consider transferring all your high-interest
debt to it. This strategy won’t eliminate your debt, but it can
lower your costs. Call the bank that issues your card and ask for
a lower rate. Tell them another company has offered you a better
rate with no annual fee. You will be surprised at what your lender
will do to keep your business.

Another alternative is to take advantage of the introductory rates
many card issuers offer to get you to switch credit cards. We’ve
all seen the rates that start out at 5.9%. This temporary solution
may save you a few bucks in interest and allow you to pay down
more principal each month.

A word of caution: Read the fine print before you act. Many of
these "teaser rates" last only a few months. After that,
the rate may rise dramatically, even exceeding the rate you’re
currently paying. The terms of your card may also stipulate that
the low rate applies only to new purchases, not existing balances
and that it is valid only to account balances kept for at least a
12-month period. Be careful how you execute this strategy.

6) Borrow From Family Or Friends:

Borrowing from your family or friends is worth considering. After
all, they know you, trust you, and probably understand your
financial situation better than anyone else. They might even cut
you a favorable interest rate or repayment plan. Make sure you put
the agreement in writing and that all parties involved understand
the terms and conditions of the loan. Keep this part of the
relationship professional.

Some alternatives to help solidify the deal:
a) Call the loan an early inheritance and  make sure your
siblings fully understand your financial situation so they don’t
get upset.
b) Split the difference. Pay them an interest rate that is less
than what you’re currently paying but considerably higher than
what they would earn in a liquid account.

7) Cut Expenses:

An effective way to find money and pay debts is to reduce your
expenses. Is it possible that what you consider necessities are
really optional? There are a variety of things you can do in your
daily life that can produce big savings. Here are a few simple
suggestions:

  • Pack your own lunch for work

  • Buy generic brands

  • Buy second-hand clothing or
    furniture

  • Cancel your health club
    membership

  • Clip coupons

  • Cancel your cable service

  • Cancel your extra phone services
    such as Caller-ID or Call-Waiting

  • Read books, magazines, and
    newspapers at the library instead
    of buying them

  • Carpool to and from work or
    school

  • Skip your daily latte or candy
    bar

  • Rent movies instead of going to
    the  theater and buying those
    expensive goodies

8) Obtain A Home Equity Loan:

If you own a home and have accumulated equity throughout the
years, you might consider a home equity loan, also called a second
mortgage. Many lenders allow you to borrow against a certain
percentage (usually 80%) of the equity in your home. For example,
if you owed $50,000 on a house that was appraised at $150,000,
your equity would be $100,000 ($150,000 – $50,000). You’d be
able to borrow up to $80,000, or 80% of $100,000. 

You can use this type of loan to pay off all your outstanding
debts and start paying only one monthly payment at a lower
interest rate. The interest on home equity loans is generally
tax-deductible if you itemize on your income tax return. You’re
effectively getting one of the cheapest rates for personal
consumer debt.

This type of debt consolidation is not for everyone however. It
only works if you stay disciplined and avoid charging up your
cards again. The last thing you want to do is have credit card
bills to pay on top of the home equity loan payments you’ve just
established.

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Manage Debt

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 .
Ten Ways You Can
Pay Off Your Debt

Sooner
or later you must come to terms with your outstanding debt
problems. The consequences of not repaying your debts are dismal –
it’s possible you could lose assets such as your home or car. Your
ability to borrow again might be limited due to a bad credit
rating. Your earnings could be garnished or you could even wind up
in court. Not a happy situation.

The good news is that there are a number of debt reduction
strategies that can help you reduce financial distress, manage
your money better, and improve relationships with creditors. Here
are ten of them:

1) Contact Your Creditors At Once:

This is one of the most overlooked ways to resolve your debt
problems. Don’t wait for your accounts to be turned over to a debt
collector. Communicate with your creditors and assure them you
will continue making payments. They are most likely willing to
work with you. Be honest and explain your financial situation.
Tell them you plan to pay off your debts as soon as possible. Ask
for a reduced payment schedule or a lower interest rate. Some
creditors might even be willing to accept interest-only payments
for a few months. It never hurts to ask.

2) Empty Your Savings Account:

Do What? If this advice comes as a surprise to you, please try and
understand that it makes absolutely no sense to have money in the
bank earning only 4% while you’re carrying credit card debts that
charge in excess of 18%. Paying off high-interest cards like these
is like finding an investment that yields an 18% return, all
tax-free and without risk. Even if you’re a stock market guru,
your investment returns would actually have to beat 18% because of
the tax consequences. If the interest rate on your debts are even
higher, the decision to repay versus invest becomes more obvious.

Your asking me to deplete my emergency fund? There are two schools
of thought to this question. You may want to leave a small cushion
in your account to absorb any unforeseen expenses or temporary
loss of income. On the other hand, if you truly need them, you may
decide to use your credit cards for an emergency situation.
Otherwise use some of the other strategies that follow (borrow
from your family, etc).

3) Increase
Your Minimum Payments:

Consider this. If you only made the minimum payment on a $2,000
credit bill with an 18% interest rate, it would take you roughly
18 years to pay it off. The interest alone would amount to $3,690.
Have you ever wondered why the minimum payment on your credit bill
is so affordable? Take a hard look at that last number and you’ll
see why lenders set your minimum payment so low (often 2-3% of the
outstanding balance). Doubling or even tripling your minimum
payments will have a significant impact on your ability to reduce
debt. Those increased dollars will save you thousands in interest
payments and shave months, if not years, off your debt. Don’t play
by their rules.

4) Pay Off The Highest Rates First:

Paying off the highest interest rate rather than the highest
balance will result in quicker debt reduction. Your debts may take
many years to pay off, so don’t allow the additional interest
charges that are still accruing to be at the highest rate. Pay the
minimum to each creditor and apply all your remaining money to the
debt that has the highest rate. Once the debt is paid off, move to
the next highest rate and apply the rollover amount from your
first debt. Continue down the list to the next-highest creditor
and repeat this process until your debts are gone. Stick with your
plan.

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Loan Center

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One can never tell what the future will bring. The future is full of so many uncertainties that you can never really make any kind of long term plans and then assures yourself that you will have your future covered and prepared for any eventualities.
One of the most uncertain aspects of living are the financial emergencies that often sneak up on you when you least expect it. It could come in the form of a sudden medical emergency, increased tuition for your children, a sudden need to repair or replace an expensive part of your car, or maybe your bills are due this month and you have found yourself short on actual hard cash. When these things happen you need a fast solution to the problem. The reason for this is quite simple — the nature of a financial emergency is that money is needed right NOW. The immediacy of the need for the money is what makes it so difficult for most people to address. The best solution to these problems is often by taking out a loan.
A loan can immediately solve the pressing need to get cash because the money is (after the application and assessment) readily made available to you. Of course, the catch here is that the loan that you have taken out will earn interest. This means that you will be paying back more money than you loaned. But then the interest imposed on the loaned amount is but a small price to pay for the easy solution to whatever money dilemmas you may be experiencing. The ability to get money precisely when you need it is what makes loans quite attractive to many people. More and more people are resorting to loans in order to fulfill certain financial obligations. On the other hand, lending institutions are coming out with new loan products that better address the needs of borrowers.
Courtesy of Lonely Loans

Identity Theft

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Can Consumers Fight Back Against Credit Fraud?


In this age of information, credit fraud is not a difficult crime to perpetrate. The idea that a thief could gain access to your account information or personal data is not as implausible as you might think–social security number misuse has increased over the last two years, resulting in a variety of credit-related crimes.

Fortunately, you can fight back against credit fraud by learning how credit fraud and identity theft occur, and by actively monitoring your credit report for unauthorized account use on a regular basis. Your credit report will list any new activity on accounts you haven’t been using, as well as new accounts that you did not open.

One of the best ways to keep track of new information that is added to your credit report is a Credit Check Monitoring Service, like LifeLock which provides Online Monthly Monitoring Alerts to inform you of new derogatory information, recent inquiries into your credit, and several indicators of possible credit fraud.

To have credit report information at your fingertips is the best way to shut an identity thief down–you can begin the process of notifying your creditors of the fraud, changing your passwords, and closing down fraudulent accounts before they wind up in the hands of collectors and compromise your good credit.

How Credit Fraud and Identity Theft Occur

Specific personal data, such as your Social Security number, home address and mother’s maiden name, can be all a thief needs to obtain a fraudulent driver’s license, take over existing bank or credit accounts, divert card statements to a different address, or even apply for new credit card accounts under your name. Thieves can obtain this information in variety of ways, including fishing through trash for account statements, lifting cards from lost or stolen purses, wallets and briefcases, or through telephone or Internet scams.

How to Prevent Credit Fraud and Identity Theft

Customers may be in a position to prevent potential identity theft by closely guarding their personal data. For example, never give out your Social Security number over the phone unless you know the company you are dealing with and have initiated the call.

Similarly, if your mother’s maiden name is not likely to be a secure password, consider changing it to something a little more difficult for a thief to obtain. Also, carry only the cards you are actually going to use, and leave official documents like Social Security cards, passports and birth certificates at home or in a safety deposit box.

Account Takeover Fraud

Credit card account statements contain a lot of sensitive information that you don’t want thieves to get a hold of, and even store receipts will frequently have your credit card number printed on them. Sometimes an account number is all a thief needs to make charges and obtain cash advances. It’s a good idea to shred all financial documents before discarding them.

A thief in possession of sensitive information about you may also be able to go one step further, and commit account takeover fraud, simply by calling your creditor, reading off your account number, a partial Social Security number and your mother’s maiden name, and asking them to change the mailing address on the account. For this reason, if you don’t receive a credit card statement on time, you should call your creditor immediately to verify that the address has not been changed.

Checking your credit report may also reveal activity on an account you don’t
use – get a free copy of your credit report to see your currently open accounts, and stay on top of the situation with the CreditCheck Monitoring Service.

Pre-Approved Credit Offers

Another source of potential credit fraud is pre-approved credit offers. A thief who intercepts one may fill out the application and change the address to obtain a credit card in your name for which you will never receive a statement. (To combat this, some creditors will not issue a card to a new address on a pre-approved offer certificate, but this policy isn’t universal.) This makes checking your credit report especially important, because it will show you if there are accounts being reported in your name of which you are not aware.

The thief may even make the minimum payments for a while, until such time as the card is maxed out. Then the account would eventually be turned over for
collections – in your name, and listed on your credit report.

The CreditCheck Monitoring Service Can Help

In many cases, the only way you’ll catch credit fraud early is by obtaining a copy of your credit report. However, most consumers may not have time to order a copy of their credit report on a month-by-month basis, and read through all the information looking for the items that may indicate possible credit fraud.

That’s why the Credit Check Monitoring Service
is ideal for consumers who want to keep current on their credit information. At roughly half the cost of ordering your credit report every month, the CreditCheck Monitoring Service provides Online Monthly Monitoring Alerts that show you only recent changes for easy reference. In addition, you can obtain unlimited free copies of your credit report at any time during your paid membership!

Credit Card FAQ

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Credit Cards FAQ1) What is
a secured credit card?

A secured credit card is a credit card that requires a security
deposit. These types of credit cards are generally for people with
no or damaged credit. Your credit line will represent a percentage
of your security deposit or savings account balance. If you
establish good credit with the card, the credit card issuer may
extend your credit line or offer you an unsecured card.

2) What is an unsecured credit card?

An unsecured credit card does not require a security deposit. Such
credit cards are intended for individuals with good or excellent
credit.

3) What is a grace period?

A grace period is the amount of time the card holder has to pay
the balance, before interest is charged to the balance. Grace
periods vary, but usually range from 10 – 25 days depending on the
credit card issuer.

4) What is a balance transfer?

If you already have a credit card, you can transfer your existing
balance on the previous card to a new card. Some credit cards
offer low balance transfers.

5) My credit is damaged. Can I still get a credit card?

Yes. Even if you have bad or damaged credit, you can still obtain
a credit card. You will most likely have to apply for a secured
credit card, which requires a security deposit.

6) What is an Annual Fee

A flat, yearly charge similar to a membership fee

7) What is an Annual Percentage Rate (APR)

The APR is a measure of the cost of credit that expresses the
finance charge, which includes interest and may also include other
charges, as a yearly rate.

8) Finance Charge

The dollar amount you pay to use credit. Besides interest costs,
it may include other charges associated with transactions such as
cash advance fees.

9) How do airline mileage plans
work?

Most airline mileage plans
co-branded, issued by a financial institution and an affiliate
airline. Typically, air miles are earned with every use of the
card. Most cards offer one mile per dollar spent. These earned
miles are transferred to the cardholder’s account with that
airline, where they may be redeemed. Some banks also offer airline
mileage plans without affiliations, and the customer may choose
the airline.

10) What additional fees should
I be aware of when applying?

It is important to understand that
card issuers are required by law to disclose any fees to
customers. You must read all the fine print to discover these
disclosures. Some cards have an "over-limit" fee, which
is usually $20 to $25 when you have charged something beyond your
credit limit. Another fee to be aware of is a late payment fee,
which again ranges from $20 to $25, for payments made after the
due date. There is also often a transaction fee for cash advances.
This fee may be a set rate, such as $2, or a percentage (commonly
2%-5% of the amount advanced), or a combination of the two. These
fees are in addition to the regular interest rate.

11) What is the benefit of
having a gold or platinum card?

The gold and platinum cards are set
apart from other cards because of their higher credit limits and
extra perks. They vary according to each card issuer, as well as
the credit status of the customer. Various features that these
cards offer include car rental collision insurance, travel
accident insurance protection, and extended warranty insurance.
Often, a higher household income is required.

Disclaimer:
This credit card FAQs page is a product of CreditCardDiva and does
not refer to any specific credit card or product mentioned on this
website. We offer FAQs to help inform the consumer and are in no
way suggesting any particular course of action. It is the
customer’s responsibility to read the terms and conditions of any
product offered through CreditCardDiva.

Create a Budget (Continued)

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Create a Budget
and Ways To Benefit From It
 

2) Control:
A budget is the key to enabling you to take charge of your
finances. With a budget, you have the tools to decide exactly what
is going to happen to your hard-earned money-and when. You can be
in control of your money, instead of having your money limit what
you do. This bears repeating: you can be in control of your money,
instead of letting it control you!

3) Organization:
Even in its simplest form, a budget systemizes, or divides, funds
into categories of expenditures and savings. Beyond that, however,
budgets can provide further organization by automatically
providing records of all your monetary transactions. They can also
provide the foundation for a simple filing system to organize
bills, receipts, and financial statements.

4) Communication:
If you are married, have a family, or share money with anyone,
having a budget that you both (or all) create together is a key to
resolving personal differences about money handling. The budget is
a communication tool to discuss the priorities for where your
money should be spent, as well as enabling all involved parties to
"run" the system.

5) Take advantage of opportunities:
Knowing the exact state of your personal monetary affairs, and
being in control of them, allows you to take advantage of
opportunities that you might otherwise miss. Have you ever
wondered if you could afford something? With a budget, you will
never have to wonder again-you will know.

6) Extra time:
All your financial transactions are automatically organized for
tax time, for creditor questions, in fact, for any query which may
come up regarding how and when you spent money. Being armed with
such information sure saves time digging through old records.

7) Extra money:
This might well be everyone’s favorite benefit. A budget will
almost certainly produce extra money for you to do with as you
wish. Hidden fees and lost interest paid to outsiders can be
eliminated forever. Unnecessary expenditures, once identified, can
be stripped out. Savings, even small ones, can be accumulated and
made to work for you.
 

<--Previous

Create a Budget

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Create a Budget
and Ways To Benefit From It

Budgeting is not the torture
mechanism we’ve been trained to think it is, but rather a powerful
method of gaining control, planning, communicating, and fulfilling
your dreams. At the very least, a budget will allow you to find
extra spending money in your paycheck every month! You can
actually get money by budgeting (unfortunately, most people think
of it as a way to deprive yourself).

So Why Budget?

A budget is the most fundamental and most effective financial
management tool available to anyone.

Yes, anyone – whether you are earning thousands of dollars a year,
or hundreds of thousands of dollars. It is extremely important to
know how much money you have to spend, and where you are spending
it. Yes, some of your "spending" might be for
investments, but there is an important distinction between
creating a personal budget and deciding where to invest your extra
income. A budget is the first and most important step towards
maximizing the power of your money.
 .

What’s in it for you?

Just about everything. A carpenter would never start work on a new
house without a blueprint. An aerospace firm would never begin
construction on a new rocket booster without a detailed set of
design specifications. Yet many of us find ourselves in the
circumstance of getting out on our own and making, spending, and
investing money without a plan to guide us. Budgeting is about
planning. And planning is crucial to produce a desired result.
 .

What is a budget?

A budget is a money plan. With it, you can organize and control
your financial resources, set and realize goals, and decide in
advance how your money will work for you. A budget can be as
simple as it is powerful. The basic idea behind budgeting is to
save money up front for both known and unknown expenses.
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Benefits of Budgeting

1) Know what is going on:
Personal budgeting allows you to know exactly how much money you
have-even down to the penny, if you so desire. Furthermore, a
budget is a self-education tool that shows you how your funds are
allocated, how they are working for you, what your plans are for
them, and how far along you are toward reaching your goals.
"Knowledge is power," as the oft-quoted saying of George
Eliot goes, and knowing about your money is the first step toward
controlling it. That leads us to our next benefit:

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