With the end of 2013 and the beginning of 2014 here, many of us make our annual resolutions for the upcoming year. Typical resolutions that people make are to work out regularly, to go on a diet, to eat healthy foods, to give up certain vices such as smoking or drinking, etc., all with hopes to improve our physical appearances. However, this year, I challenge you to resolve to take control of your financial situation and I’ll give you a few tips on how you can do it.
Create a Household Budget and Stick to It
The first step that you should take is to create a household budget. By doing so, you will be able to get a snap shot of your financial picture on a monthly basis. During this process, have your pertinent documents such as your paystubs, mortgage statements, utilities statements, cellular bills, cable or satellite bills, etc. First calculate what your total net monthly income is and then input a line item for all of your actual expenses. Be honest with yourself and input what you actually expend on a monthly basis for your mortgage, utilities, groceries, school expenses, clothing, gas and transportation, dining out, entertainment, credit card bills, student loans, car payments, insurance, etc. The purpose of this exercise is to show you how much money you have coming in and how much money is going out and for what purpose. If at the end of this exercise your expenses exceed your net income or if you have very little disposable income, you will realize that you will need to take action to remedy this by putting your actual budget on a diet and to trim the fat on certain expenses.
Create an Emergency or Savings Account
You’ve often heard of the phrase “Out of sight, out of mind.” If after creating your budget you have disposable income, apply this phrase each time you get paid by taking a certain amount from your paycheck and putting it into a savings account. If you are not able to do this directly with your employer and bank, then you should do this on your own. Once this amount is out of sight and out of mind, you won’t be tempted to spend it on frivolous and unnecessary things. By putting this into a savings account, you’ll have funds for a rainy day when you actually need it.
Credit Card Balances
If you carry credit card balances, resolve to develop a plan to pay down those balances. A helpful site to determine how long it will take for you to pay off your credit card balances is http://www.bankrate.com/calculators/credit-cards/credit-card-minimum-payment.aspx. Again, be honest with yourself and input your actual payment amounts that you make monthly. If you are only making the minimum monthly payments, it is very likely that it will take you several years to pay off your credit card debt depending on the balances and interest rates on your credit cards. And during that time, the interest will continue to pile up and you may never see a reduction in the principal balance of those credit cards. If you find yourself in this predicament, don’t be afraid to seek legal advice on how to remedy this situation. But whatever you do, do not rob Peter to repay Paul. Creating more debt to pay down a debt is not the answer.
Seek Professional Assistance
Whether your financial situation is stable, strong or in need of adjustments, don’t hesitate to seek professional assistance. Consult with your financial advisor to review your investment and savings strategies. Consult with your CPA or Tax Attorney to review what you should be doing to reduce potential tax liabilities. And, if you are struggling paying your bills, don’t be afraid to consult with a Bankruptcy Attorney to see if that is a viable option for you. Remember, there are two types of bankruptcies for individuals: Chapter 7 to discharge your debt and Chapter 13 to repay your debt.
Gilbert R. Dizon, Attorney at Law has over 17 years experience representing consumers in Chapter 7 and Chapter 13 Bankruptcy. His law firm is located at 524 W. State Street, Geneva, Illinois and the firm’s other areas of practice include Estate Planning, Business and Corporate Law, Real Estate, Personal Injury, Traffic, DUI and Criminal Defense. For more information, please visit www.gdizon.com or call (630) 465-0713 for a free consultation.