When you spend more money than you make each month you are
bound to have money problems very quickly. The bad part is
that most of us never realize we are spending that much until
its too late.

How many times have you used the credit cards to buy a TV,
school clothes and supplies, fixed the car, or any number of
things and not realized that you just exceeded your monthly
income. You might have even realized it but thought there is
always next month.

Credit cards are the biggest culprit but they arent the only
way to spend more than you make. Things like payday loans or
car title loans also come to mind. Paying $15 to use $100 for
a week doesnt seem too bad. However, when you ruminate on that
you are paying almost 400% in interest over a years measure these
loans generate interest on credit cards look like a dazzling deal.

Normally, installment loans have a lower interest than either
credit cards or payday loans but they might still cause problems
if you arent positive that you might generate the payments each
month.

I consider a house payment and the purchase of a car
the only real legitimate reasons for paying interest. Very
few many people have the means to contruct these purchases with cash.
If you arent careful you may still get yourself into trouble
by buying or renting more house that you may afford or having
car payments that do not fit your budget.

I just recently received an e mail from a lady stating that her
and her husband wanted to buy a new car but really didnt know
if they could afford it. This family most likely saved themself
a lot of headaches just by asking that question. I wrote back
showing her how they could determine if they could afford the
car or not.

My answer to her question was to have her develop a budget,
listing all of the other bills and expenses they have, and
then see whats left over. I also reminded her that she should
ponder the extra costs like insurance, maintenance, etc.

Over the months I have seen everybody with as little as $500 a
month income manage their finances very well while someone
else with $5000 income can not generate it last the entire month.
It all boils down to planning. If you plan your bills and
purchases each month with the desire of not exceeding your
income, you can contruct it on almost any income.