Household Budget 101 - Time To Make A Plan

Your household budget is in very good shape if you had a plus at the end of your balance sheet, so now you need to work on saving more by making an effort to pay yourself first.

If your credit card debt is not in too bad of a situation, it will be easier to Pay Yourself First by putting it into your 401K at work or into an IRA. When you get a raise at work, up your 401K or IRA by that percentage and pretend like you didn't even get it.

That will help you to put more money away for retirement and maybe even retire a few years early if you do that every time you get a raise. You won't miss the money if you don't see it to begin with.

If your credit card debt is very high you might want to hold off on the savings and concentrate on your credit card debt. If you do not have a good credit rating and cannot transfer any of those balances to lower interest cards you might even want to consider taking money out of your 401K at work to pay down those credit cards.

Especially if the interest you are earning on your 401K is a lot less than the interest you are paying on those cards. If you are completely taking it out you will pay a penalty of about 10%.

If you are borrowing from your 401k, you will have to pay it back in full, usually in 5 years, so don't do this if you know you do not have the discipline to put the money away to pay it back.

The penalty you pay for doing that will probably be worth it to relieve the stress of being in debt. If you have enough in your 401K to pay off your debt, you can then rework your household budget to put the money you were previously paying that debt with back into your 401K.

It's your household budget you can change it whenever you think it's necessary. This is an ongoing process. You have to do what works best for you or you won't stick with it.

You can get back on track with savings and your household budget once you have taken care of your credit card debt. Unless you have really huge amounts of debt try not to refinance unless you really have to.

Credit cards are unsecured debt. They might harass you over the phone, but they can't take your home away from you. You don't want to use up all of the equity you built up on your home unless it's an emergency.

Only try to refinance to consolidate debt if the interest rate is so good that your mortgage will be lower or about the same that it was before even if you pay off your bills.

DO NOT Refinance or take out a home equity loan or line of credit if you don't have the discipline to stay away from the credit cards once they are paid off. Otherwise you will have a new loan to pay back and credit card bills again within a short amount of time.

There really is no mystery to a household budget and financial planning, once you face the fears of the unknown and decide that you are going to deal with your financial situation.

It usually is the fear that we are spending more than we make that prevents most of us from starting. Anyone can do it. The sooner you start the better your financial future will be.