dealing with a drop in income bev doll family living agent uw-extension may 15, 2009
TRANSCRIPT
Dealing with a Drop in Income
Bev Doll Family Living AgentUW-ExtensionMay 15, 2009
When your income drops…
Job Layoff Illness Death Divorce
Natural Reactions…
Shock Panic Stress Denial Burden Fear
5 Steps To Financial Independence
Set Goals Analyze Information Create a Plan Implement the Plan Monitor and Modify the Plan
Financial Roadmap
Where Do You Want To Go?
Where Are You Now?
How Are You Going To Get There?
Where Do You Want To Go?
Setting Goals Specific Measurable Attainable Realistic Time bound
Goals in writing are dreams with deadlines. – Brian Tracy
Where Are You Now?
Where Do You Currently Stand Financially?
Income Coming In Expenses Going Out Who Do You Owe?
Track Your Expenses-Why?
To get an accurate picture of where your money is going
Allows you to make educated spending choices
Track Your Expenses-How?
Notebook method
Receipt method
Checkbook register
Pre-printed tracking form
“Small leaks can sink big ships.”-- Ben Franklin
The little, everyday expensescan make a big
difference!
How Are You Going To Get There? Compare what’s coming in
to what’s going out…If expenses are exceeding income, look for alternatives:
Increase income Part-time job Adjust with-holding on
paycheck
How Are You Going To Get There?
Decrease Expenses
Compare needs to wants
Find your spending leaks
Starting The Journey
Don’t think of your spending plan as a chore or something you have to give up….Think of it as a means to an end.
If you take a wrong turn, get back on track as soon as you can.
Communicating About Money Many families face money problems
due to lack of communication: Financial stresses Value conflicts Emotional uses of money Unrealistic goals Lack of planning
Communicating Tips
Define the problem Write down all possible solutions Evaluate solutions Select one solution Identify things that might stand in the
way of your success What are you willing to sacrifice to
solve this problem?
Money Meetings
One hour or less, once a month Schedule at a realistic time Hold in pleasant surroundings Have all the necessary tools available Have your task list ready
Pay bills Plan and review spending plan and goals Balance checkbook Make needed phone calls Draft letter to creditors
What If You Can’t Pay The Bills?
Don’t panic! Size up your current situation
How much income can you count on?
List your expenses Look at consequences of not paying
each one Prioritize
Pay basic necessities first
What If You Can’t Pay Your Bills cont..
Look for options Can you sell something? Can you downsize your housing? Does your decrease in income qualify you for
assistance such as Food Share, Badger Care, etc?
No matter how bad your situation is, don’t ignore your bills.
Explain your situation to your creditors.
Don’t
Where do you start?
Take action right away…reduce your chances of being harassed by working out solutions early.
Contact Creditors BEFORE you miss a payment
Prioritize Bills Don’t Take on New Debt Don’t Ignore Bills
What can happen when you don’t pay bills?
Utilities shut off Interest Late Fees Turned over to
collection agency Foreclosure Repossession Wages Garnished Legal Action
Which Debts Do I Pay First? General rules on setting
priorities: First, pay housing-related bills Pay basic living expenses next Pay the minimum required to
keep essential utility service Pay car loans or leases next… if
you need to keep your car
High, Medium, & Low Priority? Make tax debts a high priority Make student loans a medium priority Make loans without collateral a low priority Treat cosigned debts like any others Don’t move up a debt’s priority based on
threats Do move up court judgments in priority if
the creditor has already sued Be cautious about consolidating debts or refinancing your home
Tips Negotiating with Creditors More likely to work with you if:
been a good customer contact them before they contact you
Options you could request from your creditor: Reduce monthly payment Reduce or drop fees for late payments Lower interest rate Pay interest only on the loan until you can resume
making monthly payments Request permission to sell the item
Getting Your Report
Free Report available www.annualcreditreport.com 1-877-322-8228
You can also contact the credit bureaus directly TransUnion Experian Equifax
Good Luck On Your Financial Journey!
Unless commitment is made, there are only promises and hopes . . .
but NO plans.