Taking a risk? Here are some tips that will help you!

As we face the inevitable challenges 2011 will throw at us, remember that being thrifty can be fun too. 

1. Draw up a sensible monthly budget for your spending. List all monthly payments and expenditures and make sure they are covered by your monthly income. Make sure you stay within your budget guidelines.

2. Use cash instead of credit cards. Have one primary credit card and use it only for emergencies or major necessities. Put your credit card away in a safe place, not available for everyday use.

3. Try and save something every month, especially for planned spending like holidays and Christmas. Set up a standing order to a savings account. You will be surprised how quickly you will forget you are saving!

4. A guideline for an acceptable Credit limit? Do not allow increases in your account’s credit limit to rise above an amount you could easily pay off in three months.

5. Cut down on unnecessary expenses. It may sound obvious, but small things like bringing lunch to work rather than eating out, or using your mobile phone less for social calls can make a definite difference towards cutting outgoings. Before you go grocery shopping, write a list of everything you need… and if it’s not on the list, don’t buy it!

6. Become a savvy shopper. Look for deals and bargains. You’d be surprised at how much you can save if you take the time to shop around! 

7. Evaluate your housing situation. Your housing costs should be no more than 33% of your household income, including mortgage payments, tax and insurance. You can shop around for lower insurance rates, refinance your mortgage, and look for cheaper utility plans.

8. If you need to take out new credit - whether buying a property, a car or getting a loan - think seriously about how you would manage the repayments if interest rates start to rise, or if you suddenly find yourself out of work.

This is really important in the case of mortgages and secured loans where your home is at risk.

9. If you can pay for goods outright, don’t be persuaded to take out credit unless it really does work out cheaper or better meets your budgeting plans. The only circumstance where it may be worth looking into is if you are offered 0% interest. Employ caution and analyse the fine details of any credit agreement, and most importantly…

10. Do your homework before borrowing. Research what’s on offer and get some advice. Never borrow money on a whim. You will be paying the debt off for years to come.

Source : moneymarket