It’s been nearly six weeks since each of our Financial Fix-up Families met with a financial counselor from The Village Family Service Center. We’ve run stories detailing each of these sessions and the advice the couples received. On Feb. 2, we’ll have a story detailing how each did during the challenge and what’s next, financially speaking. A few days later, look for an article outlining how YOU can do your own money makeover, with tips from our financial experts.
In the meantime, I’d like to share a few of the top tips I’ve taken away from the series:
- Keep in mind the three types of expenses that make up your spending: fixed (rent or mortgage, car payment, utilities), variable (food, toiletries, gas for the car) and periodic expenses (medical bills, home improvement, car repairs, insurance payments). Those periodic expenses tend to be the ones that jump up and bite us, but they don’t need to — if we plan for them. Estimate how much you spend each year on those sort of expenses. Divide by 12. Each month, put that amount into a savings spending account. That’s how you need to view it. It’s money that’s there to spend when (not if) those expenses pop up.
- There’s really only two ways to fix a budget problem: Spend less or make more. The best way to spend less is to track where the dollars are going (see a sample tracking sheet here and then print a blank sheet). Think creatively about how you can make more money (a paper route, donate plasma, sell your old things).
- Don’t fall behind on your home or car, and stay current on your credit cards. If you absolutely cannot pay a bill one month, skip the credit card. It’s unsecured debt — the credit card company can’t come take your home or car if you miss a payment. Financial guru Suze Orman recently spent an entire show hitting home this message. NEVER refinance your mortgage to pay off your credit card, she says. While this will likely provide you lower interest rates, by doing so, you’re putting your home on the line for debt that previously wasn’t tied to any asset. And a lot of the time, people who do this just end up racking up more credit card debt, Orman says.
- When you leave employment, roll over that 401(k) into a traditional IRA. You’ll have better control of your money and likely better investment options. Chat with a banker, or visit the website of any low-cost brokerage house (Fidelity, Vanguard and Charles Schwab are just a few examples).
- There is help out there. Whether it’s a debt management program, assistance for health insurance or utilities, or even a grant to pay off those past-due bills, help is available. Call The Village if you’re struggling. Need help doing the calculations on your debt payments, saving plan or budget? Visit my new favorite website: www.powerpay.org. It’s free.
Readers, what have you learned? What are you still wondering?