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Tips for evaluating financial health

Are you feeling out of sorts? Does your credit score cause you anxiety? Are you considering cutting up all your credit cards out of desperation?

Experts say that personal bankruptcy can be avoided through the use of just a few check-up tips, which can be used at any time to evaluate your finances. By taking the time to go over your debts and earning potential, you can avoid pitfalls that plague other individuals.

First, ask yourself where your money is going. Track your spending meticulously using programs offered at no cost through banks or other financial agencies. You can set up alerts that let you know when your spending is reaching its limit. You should also evaluate your financial picture in annual, rather than just monthly, terms. People can be forgetful when they budget for a month, failing to remember to account for gifts or surprise expenses. Less than five percent of people have difficulty understanding our yearly financial picture.

Money can also be wasted by carrying too much debt, according to experts. Extra cash should go toward paying off credit card and other bills, because interest payments can add up quickly.

It's important to ask yourself whether you are wasting money. By cutting out small expenditures, you can often save more than $100 per month, according to researchers. Analyze your weaknesses and spending habits to determine where you can make these cuts. Everyone has a financial Achilles' heel, and targeting a specific problem can help you make a better budget.

Additionally, make sure that your significant other is on board with your budgeting plan. If they do not know or understand new budget goals, they can't help you achieve financial success.

Finally, consider whether you are saving or spending too much every month. Although it may seem impossible to save too much, it is dangerous to keep money in the bank that could go toward paying off loans or other obligations. Finding a balance between saving and spending can make the difference between soaring financial success and a credit score that needs CPR.

Source: Business Insider, "The 8-question financial health check-up everyone should take," Kimberly Palmer, May 22, 2012

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