Financial Tips for a Challenging Economy

In today’s economy, it’s important to watch your money and make it go as far as you can.  If your financial situation is causing stress for you or your family, keep in mind that free help is available.

MINES’ EAP program offers free financial counseling for every financial situation.  A financial counselor can help you to set priorities and develop a plan to get on track no matter what the circumstances.  Every financial situation is different, and it’s best to consult with a professional, but the following tips are a good start, especially during a challenging economy.

Take a good, hard look at your financial situation.  Before you can make a plan, you need to know where you’re starting out.  Add up the amount of debt that you have and figure out if your expenses exceed your income.

Set priorities.  When there are many demands on your limited resources, it’s important to identify the one that is most important.  It’s also helpful to eliminate those that aren’t important and stop wasting your money on them. 

Make the credit card companies work for you.  Ask your credit card companies for a lower interest rate, then list your credit cards in order from the highest interest rate to the lowest.  ‘Attack’ the card with the highest interest rate by paying as much as possible on this card and paying only the minimums on all the rest.  Once this card is paid off, cancel the card and ‘attack’ the card with the next highest interest rate.  Keep this up until you’ve worked your way out of debt.  Put all extra money towards your credit cards, even if it means getting a part-time job to do it, and you’ll eventually whittle the balance down. 

Make it a team effort.  It is easier to be motivated when you have help.  If a friend of yours is also interested in taking control of his or her finances, do it together.  You’ll both have a better chance of succeeding because you can share ideas and encourage each other during difficult times.

When it’s difficult to pay your mortgage:

Contact the Lender.  When you first realize you may become delinquent on your house payment the most important thing you can do is to contact your lender immediately.  Lenders don’t actually want possession of your house so if you ask, they often have options available to help borrowers through difficult financial times.

Address the Situation Immediately.  Do not ignore the problem, because the further behind you get, the harder it will be to reinstate your loan and find alternatives.  Ask your lender what your options are.  Some options are refinancing, forbearance (pushing a missed payment out until the end of the loan), and loan modification (the lender temporarily reduces the interest rate).

Prioritize Your Spending.  After healthcare, keeping your house should be your first priority.  Review your finances and see where you can cut spending in order to make your mortgage payment.  Look for optional expenses such as cable TV, memberships, or entertainment, and delay payments on credit cards. 

Focus on Bringing in More Cash.  Take advantage of your assets by selling a second car, jewelry or a whole life insurance policy.  Also consider taking on a second job to bring in additional income.

When the situation starts to get under control, start an emergency fund.  Unforeseen emergencies are the primary reason people get into credit card debt.  An emergency fund is vital to keeping your own finances under control. 

 

Source

Michelle Pastor, MBA and Accredited Financial Counselor

Michelle is available through your EAP for free financial coaching. Request an appointment with Michelle by calling MINES at 800-873-7138.

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For 30 years, MINES & Associates has been a nationally recognized business psychology firm that provides a variety of services to corporate employers, including:  employee assistance programs (EAP), managed behavioral healthcare, organizational development and psychology services, wellness programs, behavioral risk management, disease management, PPO services, and a number of other technology based services.  

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