The first step I took to repair my credit rating was to create a living budget. A living budget is the same as any other budget only you go into this one knowing things will change as your income increases, decreases or your monthly bills fluctuate.
Write down all of your income and where it comes from. A great way of going about this is to take a sheet of paper and make three columns. One column will be for where the money comes from (i.e. Big Boss Corporation), the second column will be for a brief description (i.e. Paychecks), the third column is for the monthly dollar amount. Most people have income coming from sources other than employers such as stocks, child support, alimony, interest on banking accounts, rentals, etc. Be sure to track every source of income.
Next make a similar chart for all of your expenses. Track every credit card, car payment, house payment, fuel, entertainment, eating out, groceries, etc. I found it easiest when I was working to repair my credit, to categorize all expenses by how often they happened. Put each expense in order by due date to determine which ones need to be paid during the first half of the month and which ones need to be paid during the second half of the month. Also, separate the expenses that do not occur every month - such as car registrations, insurance payments, etc.
The next thing I did to repair my credit rating was compare all of my income to my expenses. If your monthly expenses are larger than all of your monthly income, it is time to start making some phones calls and cut backs. When I worked through my expenses I learned that I was eating out 3-4 times a week, which many do without even noticing. I know some people who stop by Starbucks every morning on their way to work that one cup of coffee a day adds up to over $100 month.
It is important to find various ways to cut back on your expenses, even if they do not outweigh your income. Pay closer attention to the prices of your groceries for one. Many people will spend $400-$800 a month on groceries for a family of 2-3, when simply choosing lower priced items and checking the price per ounce on the shelves can save a bundle.
When I was trying to repair my credit rating, I realized that in a two adult household we had three car payments. We were paying a monthly payment for a car that neither of us drove - it was sitting in storage. We quickly put it on the market and earned another $5,000 to apply to over due bills.
As you sift through your various incomes and expenses, you will soon discover that the number one issue with your credit rating is your current spending habits. Once you get your spending habits under control you will soon be able to focus on using your credit wisely.
Write down all of your income and where it comes from. A great way of going about this is to take a sheet of paper and make three columns. One column will be for where the money comes from (i.e. Big Boss Corporation), the second column will be for a brief description (i.e. Paychecks), the third column is for the monthly dollar amount. Most people have income coming from sources other than employers such as stocks, child support, alimony, interest on banking accounts, rentals, etc. Be sure to track every source of income.
Next make a similar chart for all of your expenses. Track every credit card, car payment, house payment, fuel, entertainment, eating out, groceries, etc. I found it easiest when I was working to repair my credit, to categorize all expenses by how often they happened. Put each expense in order by due date to determine which ones need to be paid during the first half of the month and which ones need to be paid during the second half of the month. Also, separate the expenses that do not occur every month - such as car registrations, insurance payments, etc.
The next thing I did to repair my credit rating was compare all of my income to my expenses. If your monthly expenses are larger than all of your monthly income, it is time to start making some phones calls and cut backs. When I worked through my expenses I learned that I was eating out 3-4 times a week, which many do without even noticing. I know some people who stop by Starbucks every morning on their way to work that one cup of coffee a day adds up to over $100 month.
It is important to find various ways to cut back on your expenses, even if they do not outweigh your income. Pay closer attention to the prices of your groceries for one. Many people will spend $400-$800 a month on groceries for a family of 2-3, when simply choosing lower priced items and checking the price per ounce on the shelves can save a bundle.
When I was trying to repair my credit rating, I realized that in a two adult household we had three car payments. We were paying a monthly payment for a car that neither of us drove - it was sitting in storage. We quickly put it on the market and earned another $5,000 to apply to over due bills.
As you sift through your various incomes and expenses, you will soon discover that the number one issue with your credit rating is your current spending habits. Once you get your spending habits under control you will soon be able to focus on using your credit wisely.