Changing Our Narrative
By Greg Morris
Identify your financial goals for the time period (week, month, or year). Make a list of what you would like to accomplish this year. Whether it is to move to a new apartment, buy a car, get out of debt, new clothes, purchase a home, new computer, or start school, each item comes with a price tag.
How are you going to be able to accomplish your goals? Borrowing? Saving? It is best to develop a plan before going shopping for the item. Begin with research, and determine in your mind what you would like to do. For example, to buy a car, you must decide if you want to buy new or pre-owned, what type of car, which car, how much can you afford, do you have a trade-in, do you have savings to put down.
Personal finance is a huge topic that encompasses many areas. The needs of a 20-something often do not match those of a 50 or 60-something. Twenty-somethings are concerned with having the latest fashions, the latest tech equipment, the latest tennis shoes, rims and a freshly washed car. Whereas a fifty or sixty-year-old may be concerned about job or career stagnation, adult children moving back home.
Let’s take an honest look at our finances and assess our current financial status. No matter how well or how bad you think you are doing it is good to assess where you are. First, total your income from all sources. Then, total all of your expenses, whether it is cash or check or credit. Write down the balances of each credit card. List all of the expenses that you pay regularly.
Next, subtract your monthly expenses from your monthly income. If your monthly income exceeds your monthly expenses, congratulations. If your monthly expenses exceed your income, you have a problem. This may explain why you never feel that you have any money. To solve this problem begin by quickly assessing your expenses and evaluate what you can eliminate or reduce.
See if you can reduce your expenses below your income by $100 per month or per pay period. See if you can deposit $50 of these funds to establish a savings account and begin an automatic transfer to your savings one day after you are paid. The average payday loan is $375 for a two-week term with rates of $10 to $30 per hundred. So basically a loan of $375 can cost as much as $520 if repaid on time. If not, the amount can be much higher.
There are some simple ways to make your money go further. One way is to look at your withholding elections made on your paycheck. Are your deductions correct? Are you paying for something unnecessary out of your paycheck? Make sure that you are deducting enough to cover taxes, paying the optimum amount into your 401(k), and covering only the dependents that you must cover.
Although not a recommended option, you can change your dependents to the lowest amount for a quick boost in income. This comes with a penalty if you continue this without changing it to the correct amount. It is an option and is less expensive than a payday loan if done correctly.
The one thing that we all have in common when it comes to finances is that we all need a plan. A wise person once said, “Failing to plan is planning to fail.” So no matter where we are in life we all need a plan. Some people feel that because they have a budget that is equal to a plan, however, that is not always the case. All plans should consider the budget and all budgets should be a part of the plan.
A common concern that I hear often is that “I make a decent living but at the end of every month I am broke.” To solve this concern most banks offer some sort of a summary with online banking. Run this report regularly to determine exactly where your money is going. Be sure to identify every charge on your account each month. Often we have signed up for monthly services that are being billed directly to your account and you have forgotten to cancel or forgot you signed up.
Next, identify what is necessary and what is unnecessary. This can be difficult but the necessities are rent, groceries, utilities, gas, car payments, credit card payments, medication and insurance. For some, hair care, nails, Starbucks, dining out, and entertainment are necessities. You are the only person who can decide what your necessities are.
It is easy to outspend your income. Once this happens we fall behind on our monthly obligations and then we begin playing catch up. If we continue to fall further and further behind in our bill paying we run the risk of being devastated by a car repair bill, unexpected bill, or any other need for cash. The average payday loan amount is $375 which will cost anywhere from $10 to $30 per $100 borrowed for a two-week period. However, you cannot borrow yourself out of debt.
