From Black Voices — If you want to get out of debt in 2011, you’re not alone. A survey from the National Foundation for Credit Counseling reveals that reducing debt is Americans’ top financial New Year’s resolution. What else are Americans planning to do to fix their finances? According to the NFCC survey, which was conducted online, individuals who were polled stated the following:

My #1 New Year’s resolution for 2011 is to:
A. Decrease debt: 69%
B. Increase savings: 7%:
C. Improve my credit score: 18%
D. Decrease my dependence on credit cards: 7%

It’s high time Americans got serious – and I mean really serious – about becoming debt free. Studies like the NFCC’s often show that people want to get out of debt, say that they plan to pay off debt, and yet fail to follow through. As a Money Coach, I know that LIFE often gets in the way of people’s best intentions.
LIFE is an acronym that describes the four ways that your budget gets out of whack – forcing you to spend more than you planned for the month, or causing the best-laid plans to get scrapped because of unforeseen events and unanticipated situations. When emergencies and other unexpected things happen, you can wind up in debt – or unable to pay off that debt you’ve vowed to get rid of.

But you can counter this problem with careful planning and by recognizing how LIFE events can impact your budget. Here is what LIFE means:

-Listed items are under-calculated.
The “L” in LIFE stands for expenses that are “Listed” items in your budget, but your numbers are actually way off the mark. Unfortunately, many individuals who draw up budgets don’t use very precise numbers.

People have a tendency to underestimate their spending. Take cellular phones, for example. If you own one, you probably account for it in your monthly budget with a figure like $49.99 – or whatever your basic monthly charge happens to be. But do you find that you regularly talk beyond your allotted cell phone minutes, so that you wind up with a mobile phone bill closer to $80 per month? If so, you need to adjust your budget and put in more realistic numbers for this expense.

Household bills, like electricity and gas, are another area where people get tripped up. They include these expenses as a flat cost in their budgets, say $100 a month. But their heating or air conditioning bill is routinely far more than that $100, especially during times of extreme weather.

-Impulse purchases seduce you.
The “I” in LIFE stands for “Impulse” items that you buy on a whim.

We all make impulse purchases from time to time – but some people do it on a regular basis. It may be that you’re reading the newspaper and you see a discount coupon for a retail store you like. And before long, you’re at the mall, shopping. Other times, you may be surfing the Internet looking for information, when a pop-up advertisement seduces you with some intriguing offer. Next thing you know, you’ve whipped out your credit card to buy some product or service. You’ve also derailed your plans to become debt-free.

(Continue Reading @ Black Voices…)

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