Managing Your Money
Lesson 4: Get Sunglasses: Your Financial Future Can be Bright
Practical Steps to Success
It is really important that you do what you can to make it easy to change your money habits. For example, if you don't don't like going to the bank to cash checks and procrastinate making money transactions then get direct. This will allow you to get better rates at most banks and a lower monthly fee. This will also help you to learn to look at your checking account balances and face the reality of what is going into your account.
Pay attention to bank fees. If your bank charges fees for two-timing it, then get a plan together that will allow you to go get cash once per week at the same day at the same time. Develop a system that will force you to hold yourself accountable.
Pay Attention to your Credit Score.
According to www.myfico.com, important steps you should take are knowing your credit score and protecting you credit. I have had a major battle with this issue. I didn't realize that I had to be aggressive in improving my credit and waiting out the 7 years after the bankruptcy just wasn't enough.
Steven Snyder has excellent advice that could be used for people who filed bankruptcy or even those of you who are swimming in troubled financial waters.
Balance Your Checkbook.
Sit down on Tuesdays, or Wednesdays and set a timer if you need to. But balance your checkbook so you know how much money you have in the bank.
Reestablishing Credit.
Snyder refers to his “6 Seasons Strategy” for reestablishing credit. They are practical, simple strategies and could be used as goals to slowly but steadily change your financial outlook. I encourage you to try one or two of these strategies to get what I would call a “psychological victory” and gain some momentum.
Pay your Bills On Time or Early
Commit to paying your bills early or on time. If this is hard for you then look at the due date of a bill and write it down as if the date is 3 days earlier. I mentioned this before, I know, but it's important. Trust me.
Learn to live off a percentage of your income.
Establish a good relationship with your bank.
Go in one afternoon and ask to speak to the Bank Manager. Tell them you are interested in discussing ways you can improve your credit score.
Miscellaneous Tip
Here’s another tip. "Money Drunk, Money Sober" says you should “wait 24 hours before buying anything major", and never buy anything on impulse.
Seek wisdom from other people.
Seek expertise from people who either know about finances, have gone through what you are going through or specialize in helping people like you get to where you want to be. If you continue to have problems with your vehicle and every time you get to a stop light the engine dies out, you should get fed up enough to ask questions of people who have overcome car troubles. You should be interested enough to ask questions at dinner parties, in bank lines or of co-workers. Listen to people when they talk about the interest rates they have for their mortgages.
Elizabeth Warren also offers some sage advice to those who are looking for a way out of financial misery. She says “don’t stretch yourself to buy a house you can’t afford.” This is particularly good advice in that it emphasizes the fact even if you can afford to buy something it may not be the best thing to purchase at the time. Be wise in what you commit to. If you want a home, put a plan in place to improve your credit, save money and go for what will fit in your budget and then, if you exceed your own expectations, more power to ya! Just don’t be so consumed with buying your dream house only to end up “house poor.”
Questions to Ask Yourself
Warren asks the following questions:
“What is your emergency plan?” Have you planned for any what ifs in your life? I am an optimist and have faith that all things good and bad will help me to become a wiser person, but I can’t be blind to the fact that things may happen to me that I have no control over. If I am doing my part to be responsible and practical with my finances then when the crisis hits, I have more options if I already had a plan. I have my faith but I have my practical solutions as well.
As a result, I have had to make up for lost time by educating myself on how to improve my credit.
Go to www.myfico.com
What do you do now?
Putting legs on your plan
You can be the comeback kid. Donald Trump did it, Thomas Jefferson did it.
Get your comeback strategy together. Like a quarterback in charge of a team that is 2 touchdowns behind with only 4 minutes to go, get ready to score, or at least improve your credit score.
Look at the "Credit After Bankruptcy" book for tips on how to make a comeback from bankruptcy. Stephen Snyder says you should do the following if you have filed Chapter 7 or 13
Julia Cameron came up with a great idea as well. She suggested that you “stop debiting” for a while. Pay cash for things and see how much money you are spending she suggests. This would be a way to see if you are making emotional buys or if you are thinking before you pull out the ATM card.
I think one of the most important lessons I learned about my road to nowhere is that I paved it. I ignored all the signs that said something wasn’t right. I know first hand the cost of making big mistakes in your financial planning. My father died suddenly at 48 and left my mom without an insurance policy on a teacher’s salary. There was no nest egg, no will and no need for estate planning. There was just emotional and financial devastation. My father was a proud man who had his own contracting business. But he didn’t put a plan into place for his family’s finances.
To this day, I think some of the reasons for my father’s untimely death is because of stress and worry over money. This legacy of lack and money problems was something that I was quite accustomed too, but my children (when I have them) won’t have the same reality because I have learned from my mistakes.
I “get it now”, but I lost it all first. Even if you have traveled a similar road, you can get new directions and start navigating on a different path.
Bibliography
Money Mistakes You Can’t Afford to Make - Paul Lim
The Two Income Trap: Why Middle Class Mothers and Father’s Go Broke - Elizabeth Warren and Amelia Warren Tyagi
Credit After Bankruptcy - Stephen Snyder
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