Most times understanding how to tell what you can afford… and what you can’t, isn’t looked at objectively. I mean, you have a desire or want for a particular consumer item, so people have a tendency to justify being able to afford that item. It could be a new car, television, whatever … and let’s face it, if we want it, we justify being able to afford it.
You can qualify a new purchase in any number of ways, if you try hard enough… for instance… that new car? The old one has high miles, it isn’t gas efficient, or it just isn’t nice-looking anymore. What about that new TV? The old one isn’t HDTV ready, it doesn’t fit into your space well, one knob is broken… you get the idea.
Now you can objectively determine whether or not you can afford to purchase that new consumer product using a worksheet that automatically calculates financial ratios you need to know… no longer is it a matter of whether you can squeeze the cash or handle the payment this new purchase will bring… no more guessing!
If you complete the worksheet honestly, you will know right away whether that purchase desire is really a good idea or not. And if it isn’t a good idea in its original form, you can then consider other ways to achieve pretty much the same thing. For example, instead of a new car, maybe a car that is a couple years old would work in your budget.
You can also use the free household budget form to prepare your monthly budget, and see how your ratios improve over time. As your ratios improve, you should also see some improvement in your credit rating, but keep in mind, when you see improvement this month, it may still take the credit bureaus several months to show any improvement.
So get your papers together, and take a little time to complete this free online household budget form now, and work your way to better spending decisions!