According to a national survey in the United States 35% adults said that their credit cards are maxed out, or close to being maxed out. Looking into the details, women are a more likely than men to have their credit cards maxed out  (37.3% for women vs 33% for men).  When analyzed by age group, the highest level of 43.1% occurs in the 25 to 34 years age group, speculating that in this age group, incomes are lowest and wishes are highest.   As expected, the age group of 55 and older is the most conservative with a credit usage of less than 50% of their credit limit, or 47.5% to be exact.
Enjoying life through credit cards is risky business for the ones who don’t have a sound management of credit and spending.
Planning and budgeting is the best way to gain control of one’s finances, and the best way to avoid having finances take control of your life. And it’s not that difficult.  Take a good look at your incoming cash flow, from all sources, from work income to royalties and investment income; then take a look at your necessary expenses like rent or mortgage, debt payments (credit cards, auto loans, student loans, personal loans), insurance, job related expenses like commuting expenses, groceries, dry cleaning etc.  Account for savings for both long term savings and to build a cushion for unexpected expenses like car repairs or home maintenance; what’ left is your true disposable income that you can use to enjoy your life.  What happens if there’s nothing left for your true disposable income, of if it’s not enough?

You have three choices:

1. Increase your income: either by finding a better-paying job, or get a second job, or both;
2. Decrease your expenses: simplify and eliminate how you spend your money;
3. Both 1 & 2 above.

Make a yearly budget, which includes your vacation budget, and your holiday budget.  You can use a spreadsheet, or one of the financial softwares, or just an old-fashioned pen and paper, it doesn’t have to come more complicated than you can handle. Break down your yearly budget into a monthly budget, and then further more into a weekly budget.  When you’ll be facing an expense which is not into your budget, don’t do it! Just say NO!  If you think this new expense is still necessary to you and your life that you MUST do it, go back to the drafting table and re-work your budget, add the new expense, and cut off some other in order to have a ‘balanced budget’: there’s no free lunch, something’s got to give.
This way each week you’ll know exactly what expenses you’ll expect to pay, including enjoying your life in terms of going out to dinner, trips, movies, hobbies, and whatever else you like to do.  And having to give up little things here and there, assures you that the big things like vacations, savings and investments are taken care of.  That’s the difference between being in control of your finances and your life, and having your finances control you by having to manage collection calls, late notices, shut-off letters, bad credit, and not having the means to take care of the unforeseen expenses, those curve balls that life throws at you every so often.

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Photo Credits: m o d e (cc)