Monday, June 11, 2012

Basketball and Debt

The NBA Finals was action packed with wins from the Spurs, Thunder, Lakers, Clippers on the west and the 76ers, Heat, Pacers and Celtics on the east.  Then it was the Celtics, Thunder, Spurs and the Heat, then the Thunder and the Heat.  Now everyone will be watching the NBA finals to see who wins between the Thunder and the Heat. With all this excitement about the NBA Finals, consumers should use that same excitement to improve their finances and get out of debt.  

Some consumers even go into debt watching basketball: ordering cable sports packages, have game parties, go to sports bars to eat, drink and watch the games all day, buying tickets to live games, and buying sports memorabilia.  All of these costs can add up and cause you to spend more than you earn. 

The goal of basketball is getting the ball to go securely in the net to score points. The goal of getting out of debt is to pay off the debt and increase your credit score.   If you are obsessed with watching basketball you may be obsessed other things.  If spending more than you earn is one of them, here are 6 ways to help you get out of debt and increase your credit score. 
  1. Don’t hit an air ball – Many people file bankruptcy multiple times as an easy way to get out of debt.  You should only file bankruptcy as a last resort.  Filing for bankruptcy greatly lowers your credit score and remains on your credit report for 7-10 years.
  2. Ball control – Manage your finances by reducing expenses and reducing debt. Taking control of your finances is key to developing good spending habits and reducing the change of having a financial crisis. The total amount of debt you owe contributes to 35% of your credit score.
  3. Shoot for a basket – Set financial goals as part of your budget. Develop an action plan to achieve each goal.  Creating a budget helps you live below your means, reducing your spending and reduces your chances of going into debt.  Your total monthly debt excluding mortgage and car loan should be no more than 10% of your total monthly gross income.    
  4. Don’t try to achieve a bury – A credit score or FICO score ranges from 300-850. Only a small percentage of Americans, less than 5% achieve a score in the 800’s.  Focus on paying down debt, paying your bills on time and getting current on any late accounts. These actions will help increase your credit score.  Don’t focus on getting a perfect credit score, focus on getting the best credit score you can. 
  5. Don’t stay cold – Many consumers have tried different methods on their own to get out of debt.  If you are unable to improve your situation on your own, don’t stay cold – get professional help from a credit counselor, financial coach or financial planner. 
  6. Avoid disqualification – You can lose your job or get disqualified from a job by having bad credit.  Bad credit can also prevent you from getting approved for a loan or line or credit. 

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