Many families struggling with household finances appear to have at least one thing in common with lawmakers in the nations capitol: A certain disdain for preparing and living on a budget.
By STEVE ROSEN
The Kansas City Star
Thats the takeaway from a survey released Friday by credit card comparison website CardHub.com. The study ranked cities nationwide on how well households handled a budget, or if they did at all.
According to the survey, the Kansas City area ranked among the worst communities for budgeting. Others on the bad-budget list included Chicago, Pittsburgh, Las Vegas, Detroit and Orlando, Fla.
The cities with the best budgeting habits were Boston, New York, San Diego, Los Angeles, Minneapolis, and Washington, D.C. (presumably excluding Capitol Hill).
CardHub analyzed historical consumer activity data in major metropolitan areas. It looked at debt-to-income ratios, bankruptcy rates, foreclosure activity and relative cost-of-living.
The economic struggles weve endured in recent years have placed considerable emphasis on both the importance of budgeting and our oveall inability or unwillingness to do so, CardHub said.
The organization pointed to data from the National Foundation for Credit Counseling that noted that more than have of all consumers do not maintain a budget. Moreover, more than 22 percent of households dont even have a good idea on what they spend on basics such as food, housing and entertainment.
To get started on budgeting basics, CardHub recommends the following:
• Feed an emergency fund. Set aside a little each month with overall goal of having a years after-tax income in reserve in case of emergency.
• Rank expenses in order of importance. This will help you cut expenses on items you may consider necessities even though they are luxuries that are siphoning your cash.
• Use the island approach. Separate your debt from everyday expenses, which will help you pay off what you owe faster.
• Treat debt payments like a snowball. Pay the minimum on all but the balances with the highest intest rate, and distribute more of your monthly funds to paying off the expensive debt. Do this until the first balance is gone, and then follow the same approach for the next highest debt load.
• Eliminate temptation. Spending triggers can destroy your finances, so eliminate them even if it means cutting up your credit cards.
Weve collectively incurred roughly $82 billion in new credit card debt over the past two years alone, and we simply cannot continue to live that way, said Odysseas Papadimitriou, CardHubs chief executive.
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