FINANCIAL Q&A SERIES - GETTING STARTED
Everyone needs a financial plan. Everyone needs to make decisions about how they will financially care for themselves and for their families. Financial planning is not exciting and is often confusing but, it is necessary for dealing with the cost of life.
Staying on budget is the means to meeting everyday needs as well as meeting future needs. We must deal with our finances. Budgets, paying bills, planning for college, planning for retirement...every stage of life requires financial planning.
How do I get started?
This is the most asked question. The answer? Simple. You have to do it! Easy to say but hard to do! Here are some pointers to get you started:
Make the decision to do it. As stated earlier, that’s the hardest part. We continue to tell ourselves that we will start to save, set up a budget and any other cliché we can come up with in order to deal with our finances. But the simple fact is, we just have to do it. And for most of us, we have to decide every day of any moment we are in the nitty gritty of life situations – buying lunch, grocery shopping, going out, getting coffee, buying shoes...the list goes on.
Don’t be afraid of making mistakes. Be flexible. You are going to make some poor choices. Learn from them and adjust where needed. If the budget is not working, find out why. Determine what changes have happened or will happen. Our finances change because we do. Remember, as the saying goes, this is a marathon not a sprint!
Create goals. Start setting goals; not only for the long run but also for the short term. Build rewards into your finances, not just the necessary goals but the fun ones too. These types of fun goals could be as follows– mini shopping spree at the end of the month, mini vacation at the end of three months, Christmas club account to enjoy the holidays. This makes financial planning so much more worthwhile. Goals for home and hearth include – setting aside money for the three month oil change, repairing the AC unit by next summer, getting the new car in 3 years and repairing the 5 year old roof in 10 years. You get the point? Good!
So let’s begin
It’s time. You have wanted to do this for so long. Make the effort and take at least an hour to think and write about your financial goals. If you need help, contact Family Life Resources, Inc. We actually love budgets!
Are you digging one "debt hole" in order to fill another? Many of us, including our government, are dealing with poor budgeting skills, poor spending habits, illnesses, job losses and so on, that have created the many "debt" holes that we are now trying to fill. Only, there is nothing left to fill the holes. Or, maybe you're in the category that, with some organization, you can get back on track and begin refilling those holes in a way that will benefit you and your family's financial future.
Family Life Resources, Inc. makes every effort to help you determine a plan of action for your financial future. We strive to offer services and resources to help you not only understand your financial situation but to also help you improve it. Even if you believe there is nothing we can do, we can still do something. We can give you tools for the future. Jer. 29:11 promises us a “hope and a future.” With that as our guarantee in life, FLR is then confident in being a part of that promise. Although you may not see immediate results in your weekly budget, you will begin to see the peace that is promised and you will be able to move forward into the future that is there for you.
I'll admit it. I use to HATE budgeting. And that's putting it mildly. I'd rather walk across burning coals. No...burning spikes. No, burning...well, you get the picture. It was a hassle!
Worse than making a budget was keeping track of my budget. There just never seemed to be enough money to go around. I wasn't living extravagantly. I was just living.
Now I am (almost) a budget guru! No, really! That's what my friends say! It has taken time to follow the strategies I try so hard to get my clients to follow and, slowly but surely, I have incorporated the steps needed to live on a budget into my financial life.
WHAT I DIDN'T KNOW
What I didn't know was that I was doing budgeting wrong! I thought all I had to do what write down what was coming in and what was going out. The truth however is that you must gather all the bills, statements and checking account information in order to determine what is being paid out and what is coming in. I usually stopped at the list. What I really didn't know was that once my Income & Expenses were organized, there would be an action to "budgeting" and I would have to abide by my categories and not spend outside these categories (a key reason as to why we never have money). Now it started to make sense. Now I had a budget to help me determine what money should or could be spend on what. Now I know the right way.
WHAT ARE THE STEPS?
As I just stated, budgets are all about the details and the doing. Most of us like one and hate the other but, we all like or need to spend, so we better know how to prepare for what to spend.
- Income & Expense - It all begins here. Do you know there are people out there who do not know exactly what they make each pay period? Even if your income is subject to change, there is an average of what you are making. Know that number! As for expenses, list out what you are spending each month, each quarter and each year. Break every expense down to a monthly payment. Car registration fees are yearly; break it down to monthly. Christmas expenses are yearly. Determine what you intend to spend and break it down to a monthly payment that you set aside. You're going to spend it anyway so you might as well get prepared. In this way, you are ready when these expenses are demanding to be paid or enjoyed. Click on this Income & Expense link for a free form to create your own budget.
- Prioritize - Now you have to determine who should be paid first, second, third and so on. You may think your favorite coffee place comes before the car payment but we all know that is not really true. Put an order to the finances. It then helps you make that much needed decision between caffeine and car. Click on the Prioritize link for the free Stabilizing the Budget form to help you with this section.
- Cash Envelopes - This is a great trick! You actually put money into envelopes based on your budget and only spend what you have. It is usually best to use it for things like auto tags, entertainment, Christmas savings, pets, etc. You can also set up labeled savings accounts with your bank. For example, I place my escrow in a "mortgage savings account" each pay period. Then, when it is time to pay my taxes and insurance, the money is there. The labels you place on the envelope or bank account are based on YOUR lifestyle. Some people don't like coffee but love to buy shoes! But, that's the point; the budget is all about you! Click on the Cash Envelopes link to learn more.
- Planning & Goal Setting - It's all in the planning. Budgets help you plan ahead. You can prepare for those "emergencies" like car tires and batteries. You can plan for the holidays, the kids back to school clothing and getting your hair done! If the money is not there, set a goal as to when it can be incorporated into the budget. Goals help make any of the sacrifices made worth it because we will make the changes we need to reach them.
SO THIS IS PEACE!
In truth, none of this is easy. However, as you begin to control your money, you will find expenses no longer control you. When a bill is due, you pay it without a second thought. Caffeine fix? No problem! Go the envelope labeled CAFFEINE. Want to go out tonight? Go to the envelope labeled DINING or ENTERTAINMENT. If it is empty, then it may mean game night at home and another look at the budget to increase this area. The point however is that you will be more at peace financially. Worries decrease about whether the car can be fixed because it is already in the budget. Now that is peace!
IT'S WORTH THE TIME
Although budgeting can feel like an impossible mountain to climb, taking it step by step will help you achieve your climb to your household's financial top. Don't think or believe it will all come together in one day. It could take several months to get to the point of being organized and knowing what works for you. Even then, you will want to make changes because our lives change so much. That is actually the beauty of a budget. It can change with you and your financial needs.
Family Life Resources, Inc. is an accredited non-profit Christian credit counseling agency providing financial and educational services. For more information about our services, visit our website www.flrministry.com, email us at firstname.lastname@example.org or call us at 1-800-553-8621.
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JUST A LITTLE NOTE ON CREDIT REPORTS FROM FLR!
You've got questions and we've got answers. Your goal is to improve your financial situation. Our goal is to help you do so.
When it comes to finances, our credit reports contain a financial history of how well we handled our business with various creditors and lenders. Are you consistently on time? Are there past due accounts? How do you take care of balances on collection accounts? How do you even understand the credit report in the first place?!!
CREDIT REPORT REVIEW SESSION
Dealing with finances is overwhelming. Is there an easier way? Yes! Talk with a Certified Credit Counselor. Become financially savvy and take the time to review and understand your credit report. Get assistance in developing a financial plan from people who understand and will offer no judgment of the "why are in you in this situation" but will instead assist you in improving your situation. There are no fast fixes. Our goal is to help you get financially healthy and improve your ability to care for yourself and your loved ones.
QUESTIONS YOU MAY HAVE RIGHT NOW
- How can you get a credit report from those who manage it?
It’s a good idea to look over your credit report at least once a year. Check a current report also before making big purchases, such as a home or car.
There are three major credit bureaus and hundreds of small credit agencies that collect and maintain your personal and financial information. These corporations make money by selling credit information. Consumers are entitled to a free credit report every 12 months. This does not include scores. In most cases, there is a fee to obtain your scores from the three bureaus.
To request a copy of your credit report, contact the credit reporting agencies directly:
- How does your information get on the credit report? The moment you apply for credit, the lender contacts the credit bureau for your credit information, which adds to your credit history. Additional information may come from public sources, such as bankruptcy records, liens, etc.
- Creditor or lender where you have applied for credit
- Potential employer
- Mortgage lender where you applied for a home loan
- Apartment complexes
- Current employer on a need-to-know basis
- Person, firm, or agency who has your permission
- Person, firm or agency with a legitimate need to know
- Insurance company when you apply for any type of insurance
, as a consumer
- How can mistakes get on your credit report? It is most important that you frequently check your report, especially to see if it’s correct. It’s reported that over 50% of credit reports have major errors. These errors could cause you to pay higher interest rates and sometimes lead to credit rejection. If your report contains errors, it is often because the report is incomplete, or it may have someone else’s information.
- You may have applied for credit under different names.
- A mistake may occur when entering your personal information, such as the address or Social Security number on the report.
- Another mistake may be that a loan or credit card payment was applied to the wrong account.
If you find an error, the credit reporting agency must investigate and respond to you within 30 days
. If you are in the process of applying for a loan, immediately notify the lender of the incorrect information on your report.
THIS IS JUST A START
The above information is great general information to help you better understand the life of a Credit Report
. In order to get personal and develop a plan to help you meet your financial goals, follow up with FLR, schedule a Credit Report Review Session
and get on track to financial health. We love to see success!
HURRICANE WARNING (ARE YOU PREPARED?)
It's here. Hurricane season officially begins June 1st and the Eastern US knows it by name. Sandy, Katrina, Hugo, Andrew. These storms have wreaked havoc in the lives of millions of people and destroyed property in amazing demonstrations of power. Your only defense is to be prepared. The National Oceanic and Atmospheric Administration (NOAA) each year presents hurricane preparedness week at the end of May with a website devoted to resources and advice on preparing for tropical storms and hurricanes (click here for NOAA Preparedness).
In addition to bottled water, canned foods, batteries and flashlights, there are other considerations in getting ready for the storm. The biggest question: Do we stay or do we evacuate? Heeding local authorities directives are always the best policy, but whichever you choose, you need to consider how to preserve and protect your most important documents. Birth certificates, passports, important records (such as insurance papers) and general identification documents are difficult to replace and need preserving. Especially in an evacuation, you need to have these records with you.
THE LIFEBOOK AS A LIFEBOAT (FOR YOUR DOCUMENTS)
The Family Lifebook from Family Life Resources is an all-in-one storage vault for your important papers that can be quickly retrieved in case of emergency or evacuation. Think of it as a lifeboat for your documents.
The Family Lifebook has places to record vital information and over 40 storage sleeves for bank accounts, insurance policies, titles and deeds. You'll know exactly where everything is and won't have to be searching multiple locations when trying to prepare for the storm.
For waterproofing and extra protection, place your Lifebook in a plastic storage container along with other valuables that need to be shielded from the elements. Being prepared is your best defense against disaster and your best chance of getting back to normal once the storm passes.
For a more detailed description of the Lifebook and its many features, click on the video below:
photos courtesy of freedigitalphotos.net
Family helping family (and friends)
A grandmother helps her daughter, who is jobless and going through a divorce. Also, she helps to care for young grandchildren by using her gas and resources as well as provide for the needs of older grandchildren who are in high school and college. Now, grandma is having financial problems as well.
The death of a father and husband upsets the delicate Peter/Paul balance he had in managing the family’s finances. Now, a mother and her college age daughter have to figure out how to unexpectedly make it financially without him and his salary.
So many financial events happen in our lives. In many cases, it doesn’t happen in a vacuum. One family member’s problem can affect other family members, especially when they have not reviewed their resources prior to offering their financial help.
How to be a resource without going into debt yourself
There is absolutely nothing wrong with family helping family (and friends). Sometimes, that help has made it possible to maintain until the current financial situation improves. However, in these economic times, financial stresses can last longer and the person helping may end up with financial problems of their own if they are not carefully monitoring their budget and financial situation. As a Certified Credit Counselor, I often have parents, grandparents, sisters, brothers and friends who have sought our service because they are now in financial distress after helping someone else in financial distress. So, how do you become a resource without getting into debt yourself? Here are few pointers:
· Know your own budget before helping others. You may be willing to offer $100 to help someone but does that mean your electric will be late or not paid at all? Get out an Income & Expense form, complete it in detail and determine how you can practically help meet their needs as well as your own.
· Find out the true situation. Is this an ongoing experience? Is Uncle Ed always in financial trouble and refuses to do the right thing? Sometimes it’s not the economy or a crisis. Sometimes, it’s just poor choices. Don’t let someone’s bad decisions affect your good ones.
· Will helping them affect your savings plan? Remember, you are not a bank. If your savings, retirement or everyday expenses are diminishing, you and the person you are helping may need to look at alternatives for helping them through their financial issues. It is better you become a resource to help you both learn better financial skills.
· And let’s not forget student loans. Parents, this one’s for you. Take Parent Loans for college off the table. When the loan comes due, in many cases, the student cannot afford to pay…and neither can the parents. The difference is that you have more stuff than your child does and the lender can (and will) come looking for it (ie. a lien against your home, wage garnishment, etc.).
One more thing....
Psalm 112:5 - It is well with the man who deals generously and lends; who conducts his affairs with justice.
Lending (or giving in most cases) is a natural act when it comes to those we love. As a matter of fact, we tend to follow scripture in that we “…lend, expecting nothing in return.” Luke 6:35. With that in mind, give freely. But I would also throw in, be wise. Find the balance and do the work of ensuring your finances are in order so that you can continue to help your “brother” put their affairs in order. Before giving money, remember these practical steps:
- Develop the budget,
- Determine what you can practically give and,
- Give without expecting anything in return.
Make use of the many resources available to help with budgeting, employment, student loans and other financial issues. Follow up with us. We’d be glad to offer you and your loved ones the help they need towards getting their financial footing again.
One of the worse financial fears we have is getting a call from a collection agency especially when we really owe the money. The second worse? To get a call from a collection agency when you know you have no debt or you know that you are not past due with any of your current creditors.
Somehow, that one little phone call can make you feel as if you have lost all control, especially after working long and hard to reach some semblance of financial freedom. That call from a collection agency can be just as frightening now as it was then and throw you off balance.
Questions flood your mind and you start to sweat. You wonder if there is some old debt haunting you. You mentally check your current creditors to make sure you have not missed a payment. Then, you wonder what the heck is going on and "who are you people trying to ruin my life!" That’s just the first five seconds!
But take a deep breath. It is recommended you get educated now because with identity theft running rampant and bogus collection agencies trying to collect whatever they can, you need to prepare yourself.
Collection Agency may be legit but the debt is not yours - Mistakes can be made. We are, after all, human. However, as scripture states, "...so be shrewd as serpents and innocent as doves." Matthew 10:16.
- Don’t panic – they already have your number but the rest of their information may not be correct
- Don’t get mad. Let them say their peace so that you can find out what they have to say and then you can let them know the truth and share it with them
- Do be informed. Know that you as a consumer have rights. If this information is indeed incorrect and the creditor refuses to acknowledge that, let them know you will follow up with a complaint to the FTC and CFPB, as long as you are certain it really is not yours.
Collection Agency might not be legit or they are trying to collect on old (very old) debt. This is when you really need to protect yourself. This type of collection call is trying to get you to agree to pay the debt and maybe, get you on the hook to pay off debt that has passed the statute of limitations (link for Florida residents) or you may have even paid it off already.
- Don't say anything that indicates the debt is yours. Make them prove it.
- Do some research of your own. Pull a free credit report to determine if the debt has been reported to the credit bureaus. It is also a good time to check your report for errors if you done so already. Get a Credit Report Review Session with a Certified Credit Counselor to help you read your report and develop a plan of action to improve your credit report.
- Do force them to verify the debt. In most cases: "You should send the debt collector a written request for verification of the debt within 30 days after receiving the validation notice. The debt collector will then be required to provide verification of the debt to you before recommencing collection activity. You may also wish to contact your bank (if you believe you paid it already) for copies of old bank statements or contact the creditor to determine whether any payments were applied to the debt in question." (from Ask Doctor Debt).
The key point to remember in either situation is that you do have some power over the situation. You do not have to be bullied and you should have a civilized conversation with the collection agent. Get as informed as possible. If you'd like to review your credit report, follow up with Family Life Resources, Inc. to complete a review session with a Counselor. The session will help you review your goals and set up a plan of action to improve your credit report and take away some of the fear of dealing with a collection call.
You've begun to realize your finances are not what they should be. Actually, you've known it for awhile but you were just too ashamed to admit it, even to yourself. And, you're certainly NOT going to tell anyone!
Living in financial shame means we believe we have made too many "stupid" mistakes with our money and have fallen short in managing our finances. We begin to believe we cannot climb out of the financial mess we have made for ourselves. We begin to believe this is our life. Worst of all, we believe we are alone.
Most of us are understanding when we hear of others having financial difficulty but we tend to be harder on ourselves. We recognize we are in a tough economy and people lose jobs. It is understandable that someone would have financial problems when there is sickness and death. However, when those things happen to us AND adversely affect our finances, we suddenly feel shame and want to hide our circumstances by trying to live as if everything is OK which, of course, only escalates our financial situation.
When bad things happen, it is not the time to go into hiding and pretend everything is ok. It is a time to get into your financial battle stance and begin fighting for yourself and your family. You need to alter your financial lifestyle and come up with financial solutions instead. So, here are some steps to eliminate financial shame; grab it by the ear and kick it out of your house forever!
GET ACTIVE - Shame can very easily turn into depression. The best way to overcome both is to get busy. Take the time to start asking questions about finances. How do you make a budget? What are my priorities in spending? Who do I or don’t I pay? Make yourself study! Get on the internet, go the library or meet with a specialist in finances to help you answer your questions.
TAKE IT STEP BY STEP - Every overwhelming situation demands we take a step back so that we can perhaps see our problems from a "birds eye view." When we are so close to a problem, it is hard to see what is going on or if there are even any solutions to resolve the problem. It is hard to deal with it especially if we are emotionally overwhelmed by it. So, take a step back, look at it from other angles and then, with some possible solutions in mind, follow through on them step by step.
OPEN UP - Share your situation with others you know you can trust. Whether it is your best friend, your pastor or a Certified Credit Counselor, just talking with someone will help you gain a better perspective of your situation. It may not be easy to open up at first but, you will definitely feel better and less alone if you do.
Debt takes time to alleviate. So does healing from some of the life situations that may have catapulted you into a financial crisis. Unfortunately, life usually doesn't slow down or clean up easily. Our lives are not TV shows that get better in 30 minutes to an hour. Most likely, no one will be dropping by with a check to pay your bills. And the lottery? Probably not a winner. Therefore, we have to take our financial healing as it comes which, is generally a slow progress from a high negative balance to less of a negative balance to (hopefully) a positive cash flow.
Financial crisis happens to almost everyone. Shame and self recrimination will not solve your problems. Taking control, setting goals and doing your best to meet those financial goals will. Get help! Contact Family Life Resources, Inc. for more information. They can help you develop a "plan of action" you can get behind...not hide behind!
Will the year 2013 be a better year for you than 2012? For many, personal finances will continue to be the "elephant" in the room. More people borrowed money from their retirement fund last year to make ends meet. For some they have been laid off and needed the extra money just to get by. For others, they fell behind on mortgages or needed the money for college tuition. What ever the reason, the cost of borrowing from your retirement is high and unless you have a way to replace the loan, you may find your lifestyle in your golden years less appealing then expected. Unfortunately, this trend is continuing in 2013.
Here are four reasons NOT to borrow money from your retirement fund:
1. Borrowing money to make ends meet while you still have income is avoiding reality.
If your income is not enough to meet monthly expenses then you need to look at your cost of living and make adjustments. Keeping up a lifestyle and hoping additional income will become available down the road cannot be sustained.
2. Those that encourage you to borrow from retirement may make money off your decision.
Be careful about advice you receive. Remember each family is different and what worked out well for others may not be in your best interest. Also understand there is a cost to borrow your own money. Your taxes may increase due to the increase in income, there may be a penalty for cashing out your retirement or you may need to pay someone a commission depending on the type of retirement plan you have.
3. There may be penalty or hidden costs to borrow from yourself.
When you make an investment into a retirement plan such as a IRA or 401(k), the money is not taxed until you withdraw it. When you add the 10% penalty for withdrawing the money early, you have not only lost some of the money you were hoping to have BUT have also lost out on the possible investment money you could have earned if you had left that money in the account. In some cases, you also have to pay the money back through a monthly payment plan. Can you add that expense to your budget without difficulty?
4. Making up is hard to do.
To make up the loss of investment income and replenish the account, you will need to increase your savings in the future. You are gambling that the future will be better then your past. In today's economy, that is a huge gamble.
Sometimes borrowing money from your retirement fund is necessary. So, what is the alternative if borrowing from yourself is not the answer? Start by identifying the reason you need to borrow.
Meeting with a professional certified credit counselor can help you determine the best action for your needs. We at Family Life Resources, Inc. can help you assess the issue and create a plan of action to determine your next steps. We encourage you to build a budget of your current lifestyle so you understand where you are at financially at this time.
FREE EDUCATIONAL COURSE ON BUDGETING!!!
CLICK HERE and fill out our form to download a free educational course on budgeting that will help answer your questions and provide a budget template for your use. This course is FREE....so take advantage of this information to help you have a better financial year in 2013.
Impulsive spending can play havoc with your budget and place you over your own personal "financial cliff." "Kicking the can down the road" doesn’t work well for the government and it will not work well for your personal finances either. Americans are bombarded daily by advertising that entice consumers to “indulge” themselves with the newest and hottest item. We are sold on the idea that owning this new item will make us happy and bring us contentment. Forget about having a budget! Forget about the real cost of the purchase! That is what plastic is for, to spread the cost over several months or years. Don’t balance your check book because niether you or the bank will make a mistake! And the newest trend? Don’t carry cash because using a debit card is so much easier.
All of the above thinking can easily lead to impulsive spending. This past Christmas season might be an excellent example for many people; no plan and therefore, no money left. Not only are we made to feel guilty about what we should be spending on friends and relatives, but we also get into impulsive spending on buying for ourselves. It is estimated that over 60 % of people spend at least $140.00 on “non-gift items” they will use for themselves. Look at the line of people waiting on Black Friday for those TV and laptop specials. Not many of those were going to be gifted to family and friends.
So we are faced with a challenge. We bought for others and we bought for ourselves. The impulse monster found our Achilles heel. Now what to do? Here are five tips to bring balance back to your financial life:
Don’t Panic! Now is not the time to feel guilty. Guilt rebounds back on you over time until you either reason the guilt away or just not care anymore. Guilt is not productive and will not help you move forward with your financial goals.
Set realistic financial goals. You may not be able to pay back all of the debt you accumulated this year but you can commit to not adding to the debt.
Look for ways to earn extra money to apply to your debt. Garage sales and trade listings by sites like Craig’s List, Ebay, Oodle and Adpage can help you sell unwanted items. I have a friend who finds items for other people. They pay him a 10% finders’ fee to pay for his time and talent. Commit to apply all extra money you earn towards the debt.
The number one behavior that contributes to impulse buying is not having a written budget. You need to know what your lifestyle is costing you in real money….each month. Once you have this knowledge than you can make informed decisions on future spending.
This last tip is a big one. Take responsibility for your finances. Only you can change the financial situation you are in for 2013. It isn’t because you are not being paid what you are worth. It isn’t because everything costs too much. It isn’t because life has not been unfair to you. It is because your past decisions have placed you where you are today. Don’t be a victim of yourself. Get knowledge, be prepared, and make sound financial decisions.
You can stop yourself from going over your own financial cliff. If you want some helpful financial knowledge, go to our website at FLRMinistry.com to find financial tools to help you set a budget and understand how to handle your finances. All of our educational tools are free.