Money Solutions (Part 1)
Standing ready to help you and your family through financial difficulty.
Many families and individuals in our community have found themselves faced with financial hardships due to loss of employment, reduction in income, or other financial challenges. In an effort to provide some assistance, we’ve put together information and resources for our members to help navigate financial difficulties.
Getting started – create a budget
When working to get a handle on your household finances, the first place to start it to look at your household earnings and expenses. If you don’t already have a budget in place, it’s a good idea to take steps to create a household budget.
Step 1: Identify household and other income sources.
Step 2: Make a list of all fixed, variable, and future expenses. Don’t forget to include health insurance. Then subtract these expenses from your total, monthly household income. (NOTE: you may want to do some investigating to understand COBRA and see if there are options that would allow you to spend less per month for roughly the same coverage).
Step 3: It’s wise to establish an emergency savings account for the unexpected expenses- even if you can only contribute a small amount monthly. Treat this like a monthly household expense.
Step 4: If you subtract numbers from Step 2 and 3 from your total monthly income you’ll arrive at your total disposable household income.
Click here for additional assistance, free budgeting software, and financial tools that can help your with this process.
What to do if your household expenses are greater than your household income?
- Look for opportunities to reduce household expenses.
- Cut energy & fuel – Are there options on utility providers, carpooling?
- Investigate insurance rates for possible savings – Autos, Homeowners & Life.
- Bundle utilities services-like cable, internet, phone
- Food – Avoid eating out and consider generic brands
- Eliminate the extras – pass on Starbucks, gym memberships, salon services, cable/internet
- Scale back on entertainment – visit your city’s website for free family fun ideas.
If reducing or eliminating certain expenses still doesn’t give you enough income to cover expenses, it may be time to contact your creditors to work out a payment plan. Here are some important points to consider when working with creditors.
- Make a list of your creditors complete with Name of the creditor, address, account info, amount owed, monthly payment, and interest rate.
- Notify your creditors before you get behind, and work out a payment plan. Be sure to keep copies of all correspondence.
- Always try to pay minimum due if you can.
- Don’t ignore mail.
Evaluate your options In addition to working out payment plans with creditors, it may also be necessary to refinance or consolidate some of your debt.
- Mortgage / Auto- can you refinance at a lower rate and thereby lower your monthly payment?
- Home Equity / Line of Credit /Loan Consolidation- You might take a look at accessing the equity in your home in order to consolidate your debt. Debt consolidation through a Home Equity loan, Line of Credit, or even a consolidation loan could greatly lower your monthly payments going to pay off debt.
- It may also be necessary to make a retirement/pension hardship withdrawals – check with your plan administrator to see if these may be an option.
Click here for personal and anonymous one-on-one financial counseling to define a debt management plan.
To be continued… Check back soon for the second part of the article about a list of resources to preserve or improve your financial well-being.