Financial

Key Signs You're Heading For A Financial

Disaster                                      

What does this picture mean to you?  Well, with the way the economy is it doesn’t mean you have money pouring out of the sky.  The opposite is true for all of us.  To me it defines am I protected from all the bills (expenses) flooding my way. 

Raising a family of 5 is definitely more financially challenging than it has been in the past.  With food, gas, and utility prices all rising to their highest ever the decision to spend on even going out for dinner has become a family ritual.  Deciding where to go on vacation (if you even take one), buying electronic devices (TV, refrigerator, etc), or trading in your car for a newer model has become difficult because of the cost that it may take on your income.  My wife and I just experienced this last week when we went to the movies for the first time in years.  One movie, a soda and a bag of popcorn – total $32.  I was stunned. 

So I decided to write this article and give some guidance to those who are looking from a real life perspective and not those financial gurus that have some type of an agenda in their writings.  The key signs listed below along with some advise that my wife and I have been practicing for over a year may help in alleviating some of the burden.  I saw the early signs of the falling economy and decided it was time to act and not wait for dozens of financial experts to interpret a dozen different scenarios of how the United States will do in the coming months. 

Let me begin by quoting a scripture from Matthew 26:41 "Watch and pray, that ye enter not into temptation: the spirit indeed is willing, but the flesh is weak".   What this means is that your heart is their regarding financial situations and you know what is the wisest approach to buying, but your hands are always in the cookie jar way too much by using your credit cards as the easy way out.  If your flesh is too weak and it is controlling your spirit then you need not buy that purchase RIGHT NOW and take a few moments to pray to Our Lord for guidance.  That cookie jar (card) needs to be empty before you can become full.

You Have No Cash

Most households live paycheck to paycheck.  So if most of your expenses are spent on your fixed income, you need to fix the problem now.  You don’t need to keep thousands of dollars stuffed away somewhere, but you do need some kind of cash cushion to cover unpredictable expenses.

Having a few hundred dollars at the right time in your life can make all the difference.  Here are 3 steps to a cash cushion.

Keep an extra $100 in your checking account – A great motivator in doing this is to think about the amount of money you are paying in overdrafts or bounced checks.  Most banks charge $35 for overdrafts and $25 for bounced checks.  If you have a cushion amount to protect you from these fees you will go a long way to help yourself I the long run. 

Funnel $300 to $400 into your savings account - $300 or $400 is not much, but it will cover most of the emergencies that come your way.  Even if the emergency expenses are more than the amount saved, you will at least cover the amount you need to pull from other sources like credit cards (A BIG NO, NO).

Don’t Touch Your Savings – Resist the temptation of touching your savings account.  Trust me, I know the urge is strong, but having this cash and allowing it to build for a dire emergency will pay off in the long run.  If you owe money to credit cards you need to learn not to look for the fastest answer.  If you have a serious emergency, cash is better than paying interest on credit cards.  Working with a credit calculator will assist you in seeing just how much the card will cost you. Building your savings is the key to pay off those high interest cards and saving for real emergencies. 

U.S. Households with less than $500 in the bank

Age group                                         Percent
Under 35                                             34.5%
35-44                                                   25.1%
45-54                                                   22.1%
55-64                                                   19.0%
65-74                                                   18.8%
75+                                                      14.9%

Christian Family Talk recommends CareOne for Debt Consolidation

Carrying Credit Card Debt

It is difficult to imagine trying to live without the convenience of credit cards. Yet many get into financial trouble in part due to their misuse of credit cards. By following a few simple rules you can avoid the missteps and use credit cards to improve you personal finances instead of falling into the credit card traps.

Don't use your credit card for loans -  Pay off your balance each month. Pretty obvious advice but way too many people don't follow it. If you use your credit card for a loans - 98% of the time that is a mistake and big risk to your personal financial future. Don't do it.
If you don't follow the advice above pay off your loan as soon as possible - Payment the minimum payment is huge mistake. You should not be making any discretionary purchases if you are not paying down your credit card debt substantially each month.

Ask for reduced fees and interest rates - The credit card companies make a great deal off the use of credit cards and the cost of acquiring new customers is high so they are most often willing to negotiate. If you miss a payment or make the payment late (by mistake, once or very occasionally) ask for a reduction in the fee. The fees are far too high and just by calling you can likely get a reduction in the fee.
 

If you don't follow the first piece of advice though you need to look at low interest rates over being paid - but don't go down that path.