Confused? or just stupid – Getting a handle on your personal finances.

admin — Sat, 29 Nov 2008 19:03:48 +0000

This is the second part in my five part series on how to kick start your financial recovery.

2. Assessing your financial situation

So you’ve decided that it’s time for you to act like a responsible adult and face up to your financial stupidity. Where to start? Time to make a budget? No. You can’t make a budget when you don’t even know your disposable income for the month. You need to know your financial responsibilities on any given day.

The easiest way to get a handle on your personal finances is to just write everything down in one place. Some people prefer to remain in the dark about their finances, hoping it’ll all just go away, or they’ll hit the lottery. You on the other hand, will be responsible and open your eyes to the pain of your financial reality.

There can be nothing worse financially, then not knowing the details of your own finances. If you are constantly surprised by getting bills for things you forgot you bought, having money unexpectedly come out of your checking account, and worse of all, missing payments. If a chunk of your money gets taken every month because of late payment fees or over the credit limit fees you need to organize yourself. No matter how difficult it may be, or how embarrassing it is to actually look at what you have done to your personal finances, it simply must be done. Get a handle on your personal finance by following some easy steps. So grab a cup of coffee and a box of tissues and sit down in front of your computer. It’s time to be honest with yourself.

First off go to every website that has to do with your money, your banks, credit cards, loans, everything. Grab every credit card bill and statement you can find then open up an excel spreadsheet, or notepad, or even a piece of paper and record the details.

For each account write down how much you owe, how much the minimum payment is and what day it’s due on, also record the percentage rate of the account.
Next, open up a calendar and record how much you have to pay on each day of the month, this will also tell you what your checking account balance has to be on any particular day.
Now record your income, and on what day you get your money deposited to your account on the calendar.
Once you have all this information recorded you can tell at a glance what you need to pay on any particular day of the month. You can also see if you’ll be short or overextended during certain periods.
Every month create a new calendar and record any changes that have occurred. Also, make sure you record any birthdays or other special events where you will be forced to spend money on presents.

I guarantee you this is a difficult process, when I sat down and actually looked at the numbers not only was I genuinely surprised, but I finally understood why I was always broke during the middle of the month and rolling in cash at the end of the month. This not knowing caused me to live like a hobo, then spend like Rockefeller. A financial roller coaster of stupidity!

Now, wipe away the tears…

You are now ready to make a budget. My next installment will cover how to make a REALISTIC budget for yourself.

Make sure you read my posts on the psychological and environmental obstacles to saving. We all start out with the best of intentions, but, Just as people vow to quit smoking or drinking or to lose weight, we are constantly bombarded with advertising, and the easy, culturally accepted availability of cigarettes or drink. Changing your behavior to go from spender to saver isn’t an overnight process and the road is full of obstacles and idiots, protect yourself and be prepared for the people who will stand in your way of financial freedom.

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Do you have a money problem? – Look for the signs

admin — Tue, 25 Nov 2008 18:26:16 +0000

This is the first in a 5 part series on the steps necessary to get the ball rolling on solving your financial woes. This first part focuses on identifying the ‘tell tale’ signs that you may be in financial peril. Or maybe you just need to work on cleaning things up a bit.

1. How to identify whether you have a financial crisis.

Before we can even get serious about saving money and repairing our financial situation we just have to accept the fact that there is a problem. This goes much deeper than just saying to yourself ‘I’ll be a little short next week so I better spend a little less for now’.

I’m going to list some of the symptoms that I experienced just before I realized that i’m in trouble. I’ll expand on each and give an example so you can judge for yourself if this applies to you.

See if you can relate to some of these scenarios..

Do you sometimes put off paying a bill until payday, even if that means your payment will be late? Do you not care about the late penalties? I’m guilty of this, sometimes I’ll check the calendar and see my car payment is due two days before I get paid. Well, the payment goes out late because I just don’t have the money.
Do you sometimes buy something even though you will then not have enough to pay your bills? Again, guilty as charged, I, of course take it up a level by mentally convincing myself that I MUST have said product or service, even though I could put it off a week or two.
Do you pay credit card bills with other credit cards? Wow, I used to do this, take a cash advance on card A to pay card B, then do it again the other way. How stupid is that? Once again, I made it even stupider by buying gift cards with store credit cards, then buying a small item and getting the change back just to give myself some pocket money.
When faced with a purchase you want {or must} make do you immediately go online and start applying for more credit cards? Is saving not an option? I did this just a few months ago, I wanted to get my brother a nice birthday present, since I had no available credit or savings I started applying for even more credit cards. Luckily, I was refused for all of them.
Do you buy things just to look cool or successful to your family, coworkers, romantic interests, etc… and then resort to one of the above reasons to justify it? Yep, for me it’s called a 2007 Dodge Nitro {fully loaded} of course. My previous car didn’t even have 27k miles on it. How stupid is that??
Do you sometimes call in sick to work because you don’t have enough money left for tolls, parking, gas, bus fare or whatever? I can’t say I’ve done this, but I have come horribly close in the past year. Trading sick days just to save 5 or 10 bucks, argh…
Do you not care if a credit card has a yearly membership fee or 20% interest rate? Is the only number you see on the screen the 300 buck credit line?? Yeah, done this too, of course you say to yourself ‘I’ll just pay the whole thing off when the bill comes..’
Do you just not pay a large bill so you can ‘catch up’ with several smaller ones? Do you not care what happens to your credit rating? I’ve done this in conjunction with #1. The juggling game only leads to missed payments and loads of late fees. I’ll never do this again.
Have you put off necessary medical or dental treatment because you just can’t afford it? yet still order lunch everyday at 10 bucks a pop? I haven’t done this, but see the next one…
Have you not fed or taken care of your pet because you don’t have the money? yet still go out partying every Friday night?? I feel horrible about this, but don’t worry, I take care of my poo’ now, she’s a happy puppy! Never again will I jeopardize the health or happiness of my pup just so I can spend money on useless crap.

One thing I noticed with the above list is the common theme of not caring about my credit rating, yet turning to credit whenever I needed money. I guess this could be the root of all my problems. You know 42 years learning how to be a spender, living the ‘i want it now’ kind of life can’t be unlearned in a few days. I know there are some stupid, embarrassing things here, but as I said on my ‘About’ page, this blog is a personal contract with myself and I need to document every little idiotic thing i’ve done so I never repeat it. Take a look at the list above, are you guilty of any of this? Do you have any crisis symptoms you’d like to share? let me know and I’ll post it up {no names of course} the more I list the less chance I do it.

Stay tuned for Part two. Assessing your financial situation - Getting a handle on your debt.

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Confused? or just stupid – Getting a handle on your personal finances.

Do you have a money problem? – Look for the signs