Recovering from a personal setback will likely find yourself having to reconsider financial priorities in targeting where to focus effort and resources. Not all household debts will equally impact your family. First payment priorities should be all bills associated with your essential needs, including utilities, food, mortgage or rent, and insurance. While you can most likely find ways to save on all of these bills, by cutting back and negotiating lower rates, paying them is extremely important.
Also, having appropriate health insurance coverage is essential because a medical emergency could put a huge dent in your finances. Check out government offered health coverage or HMO companies that offer lower but practical medical coverages.
Here are some examples on how you can prioritize your financial obligations:
> First priority debts – would include your rent or mortgage, tax liabilities, insurance premiums, auto loans, and utilities.
> Second priority debts – may include other secured loans through financial institutions, such as a car loan.
> Third priority are lenders – this includes retailers, hospitals, doctors, credit card issuers and other unsecured creditors.
Remember, each person will have his or her own unique list of priorities. Realize that just because a category of debt is listed as a third priority, does not mean it isn’t important. It simply means you need to contact and make payments to the higher priority creditors first. For help determining your financial priorities.
Set your priorities – create your financial priorities worksheet, evaluate if these are “needs or wants”, then rank your payment priorities.
Priority – make a list of all your debts; rank and figure out when, and how will pay your debts.
On your spreadsheet, create the following tabs, and make notes on how will you resolve or attain your goals:
Paying off unsecured debt
Paying all secured debt on time
Saving for a down payment on a home
Buying a car
Taking a vacation-Having money for entertainment
Starting/maintaining a savings account
Setting SMART financial goals
Before you think about setting goals, review the five parts of SMART goals.
S A smart goal is specific. It pinpoints something you want to change to achieve.
M A smart goal is measurable. You can measure or count a SMART goal.
A A smart goal is achievable. Setting goals too high can lead to frustration.
R A smart goal is rewarding. Reaching the goal should be a reward for your hard work.
T A smart goal is trackable. Set milestones and schedules for your goals.
After you decide what your priorities are, review your budget and determine which bills you are unable to fully pay. Then, contact your creditors to discuss your situation. Explain that you want to pay your bills but due to your setback, are unable to. In some situations, you may be able to get a new payment plan.
If you are bound to resolving all your financial woes, you need to have a mindset that says “I will be free from debt now”. Yes, it could be easier said than done, but with sheer determination, nothing can’t be achieved. Let me help you with few steps to finally resolving your financial woes!
The first and most important step in developing and following a financial plan is to examine your attitudes about money. Ask yourself the following:
- Are you ready to accept responsibility for changing your financial situation?
- Do you believe that you can and will change the way you make financial decisions?
- Can you identify at least one benefit you hope to gain by changing your money management behavior?
If you positively respond to these questions, then you are ready for and able to start your path to financial wellness.
Assess your financial situation
Start your journey with a self-assessment designed to motivate you. Completing this simple quiz can help you assess your current financial situation.
Clearing out financial mess
Getting yourself financially organized is a great way towards financial wellness. But before you clean up, you should also know that some things are worth holding on to. Note on the following to keep:
– Grocery receipts and other nondeductible expense receipts and statements can be destroyed after they have been recorded for budgeting purposes.
– Paycheck stubs should be checked against your W-2. If it’s a match, you can toss them.
– Canceled checks should generally be saved for three years. Keep those related to your taxes and business expenses permanently.
– Utility bill stubs may be destroyed after recording, however, you may wish to hold onto these for a year to compare monthly costs.
– Household documents pertaining to buying, selling or improving your home should be kept as long as you own the home.
– Receipts from major purchases should be kept as long as you have the item.
– Credit card receipts can be destroyed once you have reconciled with your monthly statement. Additionally, credit card monthly statements can be destroyed on an annual basis.
– Individual tax return documents should be kept for seven years, according to the Internal Revenue Service (IRS). The IRS has three years from your filing date to audit your return if it suspects good faith errors. However, the IRS has six years to challenge your return if it thinks you underreported your gross income by 25 percent or more.
Finally, before taking out the trash, be sure that all identifying information has been destroyed to avoid your personal information falling into the wrong hands.
I was thinking it would be a great time to take a look at comparing the amount you owe as well as how to create a healthy debt repayment arrangement. Obviously, this only works if you commit to spending less than what you earn. If you’re spending more than what you earn, this will cause pile up of debt – which eventually lead to a more serious financial problem.
To get you started, you need to write few items. Doing some tasks by hand adds personal touch and commitment and importance in what you want to do. You will also need to have all the latest statements of what you owe, from bills, credit card, and consumer loans. Analyze the interest rate on each.
You must make a chart with four columns consisting of each debt, amount you still owe, monthly payment, and the current interest rate on each debt. Make sure to get all the information from all the statements. The goal here is to have all your info in one spreadsheet.
Once you have the list and check which of the debts to be prioritized. Go through that list and number the debts based on their interest rate. Give the highest interest a big number 1 off to the left, the next highest a big 2, and so on. Don’t worry about which debt has the biggest balance – that doesn’t actually matter when figuring out which debt is the most important one to pay off.
Once you’re done with the order of debts in place, go to the debt marked with numbers. If it’s a credit card debt, call the credit card company and ask for a rate reduction, or transfer the balance to another card for a lower rate. You can also pay it off with a home equity line of credit or with a personal loan from your credit union. Consolidate your loans at a very low rate. The key is to lower that interest rate. Go through every one of your debts from highest to lowest interest rate and do your best to get each rate nice and low. Obviously, there are some rates you’re likely to be unable to easily change, like your mortgage rate, but see what you can do about most of the rest of them.
Over time, you should be eating away quickly at that top debt, and you’ll be able to eliminate it. Cross it off the list, then start hammering away at the new top dog on your list.
Whenever a debt adjusts in interest rate, cross it off the list, then add it back in just like a new debt where it belongs based on the new interest rate.
After you do this a few times, it’s useful to rewrite the list so that everything remains clear on it, but it’s fun to hold onto the old one (with some crossed-out debts) to remember where you came from.
If you are tired of lengthy family budgeting and want a quick fix in saving some funds, start on your basic needs – grocery. Your food budget is probably the highest budget-eater. On average, consumers spend more than 13 percent of their income on food. Fortunately, food bill is one of the most easily manipulated, and saving money is virtually effortless.
First, everyone’s heard that you should not shop when you’re hungry is a good idea. And you know the reason too well, right?
Here are some practical shopping ideas to keep in mind:
> Always shop with a list. On average, impulse buying accounts for 20 to 50 percent of a total grocery bill. Instead of wandering aimlessly through the aisles, bring a shopping list and a pen with you.
> Grocery stores are for groceries. Books, batteries, light bulbs and pet supplies can all be found at the grocery store. Before you purchase everything you need from one store, make sure you aren’t paying too much.
> Shop alone. Marketers spend a lot of money convincing kids to buy their cereal for a reason. By reducing your distractions, you can make thoughtful purchase decisions.
> Carefully consider the cost of convenience. As a general rule, the more convenient the item, the more it will cost. Ask yourself if it is really worth paying more for shredded cheese when shredding it yourself would take mere minutes and save you some cash.
> Shop only once per week. Try to adjust your schedule and your purchases so that you are going to the grocery store once a week. This will help reduce impulse shopping and should be a big cost saver. If you must go more than once per week, stick to your list.
> Plan your route. To find the most natural and least expensive ingredients, such as dairy, bread, vegetables, and fruit, try skipping the center of the store and make a loop of the outermost aisles.
> Consider generics. Look for generic brands of items where it really doesn’t make a difference. For example, most dry goods have the same ingredients, regardless of the brand. The difference in price, however, can be as much as a 50 percent discount.
> Use coupons wisely. Only use coupons for items you are planning to buy anyway. Also, make sure you compare the price of a product with the discount on the coupon to the regular price of the brand you normally buy.
Finally, don’t assume that all supermarkets have the same prices. Make a list of the ten or so products you buy the most and do some comparison shopping. Often you will find a huge difference between chains, and if you can save just 5 percent it will add up to hundreds of dollars in the long run.
Becoming a couple changes your financial situation. Whether you are in a serious relationship, newlyweds, or tied the knot years ago, there is an undeniable stress that comes from mixing love and personal finance.
If you are getting married, you and your future spouse are ready to embrace all of each other’s outstanding qualities and unconditionally accept any less-than-ideal traits. However, before you walk down the aisle and commit to spending the rest of your lives together, you need to discuss how you will be spending your money as husband and wife.
Avoid financial problems and start making plans for your future together. Find the resources you need to stay committed to successful financial planning together. Money does matter when it comes to having a happy, healthy relationship so couples should try to devote time to improving their financial standing. A little honest communication could keep your relationship from becoming a statistic.
When you and your partner are busy balancing everything in your lives, sometimes financial planning can fall to the wayside. Following are 10 quick tips about financial planning together for when life gets hectic.
1. Set priorities and specific goals. Don’t assume you both have the same goals without discussing them.
2. Discuss values. Sometimes differing values make agreement on goals difficult. When one person wants to spend now and one wants to save for later, it can be a source of friction. The same is true when one spouse tends to be less risk oriented than the other about investments.
3. Plan in five year units. When planning for five year blocks, you can set both intermediate and long-range goals without feeling you’re being deprived forever.
4. Budget together. Set up a manageable system for your cash flow together.
5. Know where your money is going. Keep records of your spending.
6. Don’t assume that because you’re both working that you have a lot more to spend.
7. Save regularly so you aren’t locked into that second income.
8. Who handles the actual paperwork can be a matter of personal preference, although both of you should practice at it.
9. Don’t confuse the task of doing paperwork with the act of financial decision making.
10. Sit down together and discuss finances at least once a month. We all know that communication is crucial in developing a healthy financial relationship, yet it’s sometimes hard to know where to start. Since taking the time to talk is a great.
Finally, the most important money move you might make for your relationship is to embrace your differences. Understand that you cannot change feelings created by a lifetime of experience; instead, try to cultivate the positive aspects of each of your styles. There is no one “right” way to handle your finances and a marriage of your money styles may be the perfect solution.
If what you spend is equivalent or even more than the amount you earn, then you need to make a balance between earning and spending. However, it is unfortunate that spending less is not always an option. If you have assessed your ﬁnances, and it may be saying that you need to increase your ﬁnancial earnings, then, it may be the right time to consider looking for other source of income or ﬁnances. You have to know that it is not really as hard as it sounds. With some planning or being resourceful, earning more should not be too diﬃcult.
IDEAS TO INCREASE YOUR EARNINGS:
> ASK FOR A RAISE AT WORK: – Having ideas on how to earn more may not require an elaborate moneymaking scheme! It may only take for you to have a closer look on what you are already earning. At work, if you have been working with the Company for quite some time, then perhaps you can apply for a higher work position, which of course will convert into higher salary. Or, you can simply ask your Company they could consider a pay raise, you have to provide something that will consider them to give you that raise, how you performed at works a big consideration.
> CONSIDER HOME-BASED BUSINESS. – This can be done full-time or part-time. Home-based work is an excellent way to earn extra income. Having work at home and tending on your personal chores is a challenge, just make sure to devote a certain work schedule for the house and “work” at home. See also that you are able to manage your ﬁnances as “self-employed”.
> SELL SOME PERSONAL ASSETS. – Assets are physical acquisitions, such as home, car; monetary property – mutual funds or certiﬁcates of deposit; or intangible rights, i.e. money owed to you by someone. If you what you owe is greater than what you own (your assets), selling some of your assets can help tip the scale in your favor.
> SELL ONLINE. – You may want to consider start an online business or you just want to unload some items that can put additional source of funds, you might want to explore selling online. It is a great place to connect with interested buyers. Just make sure to be aware of legitimate buyers, from hoax ones.
> TAKE LEAD! – A quick search online will open your minds about countless ideas on how to earn money more! From creative extra income solutions that are good in a pinch to longer term solutions for earning additional income. The trick is to pick what you’re interested in and take action. A lot of people panics when they are spending way too high and are not earning much. It is okay, but you can’t allow the feeling of helplessness to overpower you, or you will be ﬁnancially paralyzed. Out there, are countless possibilities to earn extra!