Balancing Your Checkbook Can Help You Get Out of Debt
Presented by Charles L Harmon
All of us want financial freedom but it doesn’t always turn out that way. If you want financial freedom, your debts need to be paid off as quickly as possible. This seems obvious, but if it were so obvious, why are so many of us in debt to begin with? If you have a checkbook that could be one of your problems.
Financial freedom begins with balancing your checkbook. This means what goes into your checking account must be greater than (or at least equal to) what comes out.
If what comes out of your checking account exceeds what goes into it, you’re living with a deficit. This may mean that you’re simply not paying the bills you need to pay or you’re depleting your savings and, at some point, you’ll run out of money.
What Is Deficit Financing?
Deficit financing means you’re buy things on credit, either by using credit cards or by taking out loans, such as a loan against the equity of your home. Any way you slice it, you’re taking on more debt. You don’t want to be like the government and live off of borrowed money. That doesn’t work too well for individuals.
If you make the minimum monthly payment on a credit card, it could take 30 years to pay off the debt and, in between those minimum payments, interest continues to accrue at astronomical rates. At the end of all this, you’ll pay much more for the product or service than the original price tag, even though you got more time to pay off the bill.
Deficit financing – spending more than you make – can be a short-term solution in tough times, but in the long-run, it will never bring you the financial freedom you need. Banks are eager to give people what they think they want – buying “stuff” with other people’s money. Many consumers see financed debts as “free” money, but needless to say this is ridiculous! You have to pay the piper sooner or later, and it’s always better to pay him as soon as possible.
There is no such thing as free money; you either have to borrow it and pay it back with interest, you have to earn it, or you have to make it.
- You earn money by working for somebody else
- You make money by running your own business and providing goods or services that are needed by others
- You borrow it by using credit cards, loans, and lines of credit.
How to Balance Your Checkbook
Balancing your checkbook is all about getting and staying out of debt. So how do you accomplish this balance? Well, it all begins with tracking every financial transaction: cash, credit, or debit.
- You should keep all of your receipts. This includes whenever you pull out money from an ATM or use your debit card to pay a bill.
- Keep all of your canceled checks in a safe place. At least once a month, check your existing checking account balance according to your calculations against your bank statement. This is much easier to do these days than it used to be thanks to the Internet, so you should be checking fairly frequently.
- List every bank fee in your checkbook register, including overdrafts, returned check fees, or late fees from your creditors. Schedule electronic payments for your bills to eliminate late fees and balance your checkbook regularly to eliminate other bank fees.
Become Money Conscious
Only you have control over becoming debt-free and wealthy. Learning smart money management tips will put you on the path to financial freedom.
- Make a household budget with all your monthly expenses and compare it to your checkbook and bill schedule.
- Seek advice from trusted experts about ways to cut down your monthly expenses to eliminate the reliance on credit cards and loans.
Your objective is to pay out less from your account than you are putting into it. If you aren’t doing this, you’ll need to figure out how you can cut expenses as soon as possible to reach financial freedom. Balancing your checkbook and keeping it balanced is something you cannot neglect if you want to assure you always have money in your checking account to cover any checks you write. It’s an easy step. Make sure you do it.
Charles is studying how to command success and luck in life and Online Marketing.
