Five Steps to Financial Survival
Here’s a path you can follow out of these hard times
by Lynda Striegel
The bills keep coming, along with the calls from the credit card companies. You try to stuff them in a drawer, get them out of your sight and let the answering machine pretend you are not at home. You are depressed, overeating or not eating, feeling guilty about buying that big-screen TV (and now behind on payments) and generally whining.
This is your wake up call.
1. Family is First
Money problems don’t mean your family has to suffer. Recessions come and go. Stop taking it out on your wife, husband and children. Instead, find new ways to enjoy your family that don’t cost as much. Go for walks on the beach: The view is free.
Of course the family knows there are financial problems. They feel your fear and become afraid themselves. It helps them to see that you are taking action to resolve your money problems.
Finally, family sticks together. Yours may be able to help you with loans, or you may be able to help others in your family. Make your primary focus how to help your family get through tough economic times.
2. Stop Whining and Start Acting
Pull the bills out of the drawer, open them, and list every bill you owe on a piece of paper. For credit card bills, put down the total owed and the interest rate you are paying.
On another piece of paper, list the money you have coming into your household from work or retirement. On a third piece of paper, list all your ordinary household expenses: mortgage or rent, utilities, food, entertainment.
Get out the calculator. You’re going to figure out how much you have coming into your household monthly and how much is going out monthly. If you have more going out than coming in, you need to cut your expenses. If you cannot do that, you need to take a second or third job to bring in more money.
I think the recession is already here, which makes me hopeful the economy will start to change for the better in six to nine months. So that’s your timeframe.
And stop whining. Whining doesn’t work. Taking action does. Even if your action is only to find out what you owe, that is a first step in controlling your money. That’s where you want to be.
3. Consolidate Your Credit Card Debt
How many credit cards do you have? If more than one, cut up the rest. Next, use the Internet to find out which credit card companies are offering zero percent interest for debt transferred into a new card. Transfer all the debt on your other cards to any credit card company offering zero percent interest; remember that’s likely to last for only six months. Make a plan to start paying off all credit cards.
Credit card companies are in business to make money. They will be flexible if they think it will pay off. Be sure to contact them.
4. Make Friends with Your Mortgage Company or Landlord
If you have a mortgage, what is your interest rate? Re-financing a mortgage makes sense when current interest rates are two percent below what you are paying.
But it costs to refinance. If you are considering refinancing or you cannot make your payments, call your current mortgage company first. Talk to them, tell them times are tough, ask them what programs they have to assist you, and find out what refinancing with them would cost. Mortgage companies do not want to go through foreclosure any more than you do; communication helps them figure out how to help you. So do not be afraid to explain your situation. Of course, having a good credit rating helps these conversations.
Your landlord, too, can assist you. If you have been paying rent on time and are now having difficulty, call your landlord. Explain your problems and ask for help for a short time.
5. Buy Local
Everyone is feeling this recession, including your local merchants. You want to make sure your favorite retailers, restaurants and other local businesses survive with you. But they won’t unless you patronize them. Forget about buying at the big chains or franchise restaurants. Let the rest of the country take care of them. Focus on your local businesses. When the economy turns around, local business owners will still be there and will remember your support.
Lynda Striegel was a Wall Street attorney for 25 years. Her North Beach legal practice specializes in wills, estates, business law and financial planning. She is the author of Live Secure: Financial Planning for Women and the Men Who Love Them and many other articles about finance and law.