1. finance
2. personal finance
3. lending
4. credit cards

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Since we began helping families in economic distress in 2009,
we’ve heard the same refrain over and over: “I just don’t know
how to budget my money during these difficult financial
times!” So we’ve asked some financial whizzes in town for
their suggestions, and offer this introduction as a guide.
We hope you find this helpful.
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 
When creating a budget (just a word to describe how much
we should spend and save each month), we focus on cash
flow which is how your money flows in and out each month.
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Income = How much you earn each month
  Expenses = How much you spend each month
 
Cash Flow = Income minus Expenses
If your Cash Flow is positive, you are saving money and
increasing your net worth.
  If your Cash Flow is negative, you are going into debt to pay
your monthly expenses.
 
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Example of a Monthly Cash Flow Statement
Income:
Salary
Expenses:
Rent
Groceries
Phone Bill
Movies, Restaurants
Cable
Car Payment
Utilities
$ 2400
$ 1250
$ 400
$ 100
$ 150
$
50
$ 300
$ 100
-------------$ 2350
Cash Flow for the month is therefore ($2400 - $2350=) $50.
Good news! The income is greater than the expenses. This shows a positive cash flow.
Can an even greater positive cash flow be created?...
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…Remember that $50 in positive monthly cash flow?
Let’s see if we turn that into $150 in positive monthly cash flow.
If we reduce our expenses for movies and restaurants by $100 each month…
Income:
Salary
$ 2400
Expenses:
Rent
$ 1250
Groceries
$ 400
Phone Bill
$ 100
Movies, Restaurants
$
50
Cable
$
50
Car Payment
$ 300
Utilities
$ 100
This will put $1,800 per
-------------year in a new savings
$ 2250
account!
Cash Flow for the month is ($2400 - $2250=) $150.
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 
Look carefully at YOUR bills and statements.
 
Some income entries you may need to include on your cash flow
statement are salary, interest, dividends, etc.
Some expense entries you may need to include when creating your cash
flow are rent or mortgage, heat, electricity, gas/heating oil, cellular
phone/landline, cable, car payment, gas, groceries, transportation
costs (gas, parking), healthcare costs, repairs, clothing, childcare,
health and car insurance.
 
 
Look carefully at your cash flow statement. Then determine your budget
- where you can cut spending and start saving.
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Reduce expenses.
Increase income. An additional job may be a necessity.
Open a savings account you never touch.
By separating your savings account from your checking account you avoid the
temptation to dip into your savings.
Start Small.
o  Look at your excess monthly cash flow and determine a reasonable amount that you
can save.
o  Remember - several small lifestyle changes can add up to big impact over time.
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Strategies that work.
 
Always Pay On Time
o  Even if you can only make the minimum payment, it is important to
ALWAYS make your payments before they are due. You will avoid any
late fees and you will be less likely to receive shutoff notices.
 
Renegotiate Overdue Bills
o  Many utility companies will reduce the amount you owe if you
commit to paying a small amount each month.
Consider Suze Orman’s suggestions, which follow:
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If you are in credit card trouble, you must cut up all of your credit cards now, with the possible exception of one card for
emergencies; do not carry this card in your wallet, however.
If you have an unpaid credit card balance and not much saved up in emergency savings, pay only the minimum due
on your credit card balance and instead make it your top priority to build as much of an emergency cash fund as you
can. Ideally, you want an emergency savings fund that can cover your living expenses for up to eight months. With
rising unemployment, having a big emergency cash fund is vital, even if it means curtailing your credit card repayment
strategy. It is true that if you pay just the minimum on your credit card there’s a chance it may indeed hurt your credit
score. But the single most important action to take in this severe recession is to build savings so you and your family
will be able to have money to cover your basic necessities if you lose your job.
However, if you have an emergency savings fund that can cover your living expenses for up to eight months, you must
pay more than the minimum payment on your credit cards every month, as much more as you possibly can. (This is
because, if you owe a credit card company $5000 at 18 percent interest and all you do is pay the minimum each month
it will take you over 30 years to pay it off.)
You must pay off the credit card with the highest interest rate first, and the rest in descending order. Understand
everything about how your credit card works--all fees, how the company charges you, all about the so-called grace
period, everything.
After you pay off one credit card, you must apply the money you have been paying that particular company to paying off
another credit card.
If you doubt that you can do this yourself, you must get in touch with a wonderful nonprofit agency known as the
Consumer Credit Counseling Service; they can be reached by calling 1-800-388-2227. They will help you organize and
consolidate your debt.
You must never let this happen again.
After your debts have all been paid off, you are to apply the money you were paying all those months toward creating
your future.
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  Figure
out your cash flow.
  Make a budget. Then stick to it.
  Increase your savings. Open a savings account.
Deposit as much as you can - every week.
  Start paying off your debts (the most expensive
ones first).
  Pay by cash whenever possible.
 
Wishing you and your family financial health!
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