A nonprofit publication of the Kentucky Center for Public Service Journalism

BBB Trends: A penny earned today may save you from debt tomorrow; choose wisely

April is Financial Literacy Month and it doesn’t hurt to review some tried and true strategies for dealing with money, from saving to spending to borrowing. The key to balancing all three strategies is understanding the best practices for each.  

Budget Carefully

Be realistic when budgeting for regular needs – like your house, your car, your food, and your unexpected issues. Experts recommend having three to six months worth of necessary expenses set aside in case of an emergency. It could be temporary unemployment, a big-ticket repair, or even an unforeseen illness. It’s best to have a rainy day fund, just in case.

Spend Occasionally

It’s also OK to balance that out with a little discretionary spending once in a while. Eat out, see a movie, or visit a museum – the problem we encounter nowadays is the constant bombardment of sales calls and emails. It makes it difficult to resist the urge to spend when we shouldn’t. Keeping yourself in check isn’t easy, but saving up and spending on something you really want can make it so that you don’t break the bank.

Choose Wisely

When choosing a credit card, decide how much credit you really need, what terms you’d prefer, and who’s behind the offer. The Federal Reserve is starting to increase interest rates – which does impact borrowing rates – so it might be a good time to review your credit score. See if all of the accounts listed under your name are accurate and check your borrowing power at least once a year. Request a free report by visiting annualcreditreport.com or calling 1-877-322-8228.

Your borrowing reputation is what you really need to be aware of because that’s what creditors look at when deciding whether or not to give you a loan. They look at your debt/income ratio and how you manage monthly payment – it helps them determine if you can handle a line of credit. Financial experts recommend charging your card for emergencies only and then paying the entire bill when it comes due.

Learn Proactively

Debt collection, debt management, debt relief, debt settlement – debt is a four-letter word that’s the subject to some complex laws. Learn how to exercise your rights under the Fair Debt Collection Practices Act and how to recognize debt-related scams and frauds.

Remember, sometimes things don’t always go right. But being financially literate and knowing how to work with what you have can make things a little easier. Find out more about fiscal responsibility and consumer protections on ftc.gov, and research a business you’re considering using on bbb.org.

Sandra Guile is the Public Relations Specialist for BBB. She promotes BBB’s message of marketplace ethics through public speaking engagements, presentations, media relations, press releases, web content, and other written materials. Your BBB is located at 1 East 4th Street Suite 600 Cincinnati, Ohio 45202 – to reach the office, call (513) 421-3015.

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