Debt.
It’s one of those things that most Americans have but nobody wants.
However, with the credit and housing crunch, we agree with financial guru Dave Ramsey that “the paid off mortgage is taking the place of a BMW as the new status symbol.”
This author and radio personality even encourages people from across the nation to call in to yell “I’m debt free,” once they are.
In our business here at NeighborWorks of Grays Harbor we have to agree that living as close to debt-free as possible gives an individual or family more choices and more freedom — and less worry and stress.
Just because we’re past the resolution-making month of January doesn’t mean you have to wait another year to get your financial life in order. There’s no time like the present!
So to talk about budgeting and credit, we’re once again relying on the expertise of NeighborWorks of Grays Harbor’s own housing counselor Julie Galligan.
FIXED INCOMES NEED BUDGETS
Julie says that she often finds those on fixed incomes don’t bother with budgeting because they feel like there is so little to manage.
However, “being on a small income is when money management becomes even more critical because you have less wiggle room,” she says.
Whether you have a small, medium or a large income, if you’ve ever made the statement “I just got paid and don’t know where my money went to!” you need to think about a budget.
The first step in budgeting is to take a realistic look at your spending habits.
Another good reason to begin looking at your finances now is so you can try out a budget during the first quarter of the year and be well on track as the year plays out.
Frequently when our housing counselors talk to people during financial counseling sessions, they are shocked at how much the little “extras” add up to.
Still we’re an advocate of being realistic. For instance if you smoke, you will likely continue to spend money on cigarettes. A latte lover or fast food fanatic will also want an occasional fix.
First, take a real look at what you are currently spending on everything. Then, take a look at what you are spending on “non-essentials.” Maybe you can save $50 to $100 a month if you make your own coffee and just have a once- or twice-a-week treat of a latte.
Instead of buying smokes a pack at a time, you can save a bundle by buying a carton, or even decide to quit and really save.
PAY OFF CREDIT CARDS
Did you end up putting more of your Christmas spending on your credit card than you expected?
One of the most critical things to budget is a plan to pay off credit-card debt. Start with putting extra money each month to pay off the cards that have the highest interest rate. You may even want to consider a consolidation loan with a lower rate to pay off the debt. (That is, as long as you can truly discipline yourself to not keep buying things on credit!)
REIN-IN THOSE BILLS
If your budget is very tight, Julie recommends that you look for any program that’s available to help out.
For instance, the PUD has a budget plan in which your monthly electric bill is the same each month. The benefit is that you know each month what your electric bill will be.
You may also inquire into energy assistance programs that help with energy bills during winter months. Depending on income, there is also a “budget” plan through the telephone company.
Medical costs — especially some prescriptions — can be overwhelming. With the costs of prescriptions continually on the rise, it may be beneficial to look into supplemental medical insurance. This could cut medical costs in half. Also, most pharmaceutical companies have a prescription assistance program that can provide no- or low-cost medications to low-income households.
“Just like with clothes, food or any other service, it pays to shop around. It’s worth it to check to see if you have the best deal on house and car insurance,” Julie said.
GROCERY SHOP WITH A PLAN
A budgeted life doesn’t mean a life of denial — just better planning.
Grocery shopping and eating is a good example of that. If you take time to look at ads, cut coupons, plan weekly menus ahead and then shop with a list, you will inevitably save money. (And probably eat a lot more healthfully, too!)
Usually food choices grabbed in a hurry cost more in dollars and add more calories!
A STITCH IN TIME SAVES MONEY
One of the biggest hindrances to budgeting is being overly optimistic.
If you pay your car or medical insurances or property taxes annually or bi-annually, try to budget a monthly amount to meet these expenses so you’re not struggling to scrape up the money when the bill comes.
DAY-TO-DAY MAINTENANCE
Just like a “stitch in time saves nine,” so does a couple gallons of fresh oil save a car’s engine or a dab of sealer around a window, save a wall.
Try to deal with small things before they become large things.
FREE BUDGETING HELP
Free budgeting help is available if you want help getting out of debt or establishing a household budget. Call 533-7828 for an appointment.
Dave Murnen and Pat Beaty are construction specialists at NeighborWorks® of Grays Harbor County. This is a non-profit organization committed to creating safe and affordable housing for all residents of Grays Harbor County.
Do you have questions about home repair, remodeling or becoming a homeowner? Call us at 533-7828, or 1-866-533-7828, write or visit us at 710 E. Market St. in Aberdeen.
