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Plan Well, Retire Well

Saving and investing your money

Getting Through Tough Financial Times

The new unemployment numbers for last week came out this morning, and the news was disappointing: There were 412,000 applications for unemployment benefits last week, an increase of 27,000 over the previous week. It is a reminder that many of us are still in financially difficult times. Maybe this is a good time to review some of the things we can do to minimize the financial fallout from layoffs, reduced hours, and other events that hit us in the wallet.

  1. Figure out how much you spend and how much income you have. You can't plan changes until you understand the current situation. So pull out the bills, receipts, and checking account statement from the last month or two. Use that paper trail to make a guesstimate of how much you've been spending in different categories. Then, project how much you will spend going forward. The budget sheet from our Getting Through Tough Financial Times website gives you columns for "before" and "after."
  2. Know what you can change, and what you can't. Fixed expenses – ones that are the same every month like your car loan payment and the cable TV bill – often involve a contract and are harder to change than flexible expenses such as groceries, clothing, and entertainment. So tackle the flexible expenses first. For ideas about how to reduce different types of expenses, check 66 Ways to Reduce Expenses or 101 Ways to Save Money from the Alabama Cooperative Extension System.
  3. Don't get caught off guard. Not all expenses come monthly. My water bill comes every other month; my car registration comes once a year; auto insurance is once every six months. Then there are seasonal expenses, like holiday gifts and back-to-school clothes and fees. The real killers are unexpected car repairs and the like. Make yourself an annual calendar of seasonal and periodic expenses, and a guess about "unexpected" expenses using this simple form. Post it where you can see it, so these upcoming expenses won't be surprises.
  4. Know how much you owe. For each debt, make a simple chart of who you owe, the payment amount, the total owed, the interest rate, and whether or not the loan is secured by one of your assets. For example, your car loan is secured by the car; the lender can take the care if you don't pay. Use the online PowerPay tool to figure out how long it will take you to pay off those debts. PowerPay will help you map out a plan to pay your debts off faster. See how much faster you'll pay off bills by paying just a few dollars more per month. When you pay off one bill, add the amount of that payment to the debt with the highest interest rate.
  5. Decide which bills are most important to pay. If you can't pay all your bills, prioritize. Compare the consequences of not paying different bills. Top priority is usually protecting your family and keeping a roof overhead. If you need your car to get to work, your car loan may come first. While most debts can be resolved through bankruptcy, child support, income taxes, and student loan payments cannot
  6. Contact creditors if you can' pay. First, figure out how much you could pay. Then, call the creditor and ask them to work with you. Not all creditors will give you a break, but some will.
  7. Get help if you need it. Credit counseling can help you work out agreements with lenders and get things back on track. Look for a credit counseling agency by contacting the National Foundation for Consumer Credit at 1-800-388-2227 or

It's easy to put off making changes in our spending. You may be thinking, Maybe we'll find work soon, or, I don't want the family to suffer. But the sooner you make adjustments, the better it will be for your family down the road.

How have you adjusted to get through tough financial times? Click on my name below to send me an email with your best tip. I'll share those in a future post. In the meantime, check our website for more detail on the ideas I've shared here, plus lots more about Getting Through Tough Financial Times.

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