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Credi Corp Securities Headlines: Tips for financial recovery after returning to work
Credi Corp Securities Headlines: Tips for financial recovery after returning to work
As the economy slowly recovers, and people return to work after long layoffs, the financial recovery begins. The California Society of CPAs offers these strategies for people to get their economic houses in order.
Zurich,
Zurich,
Switzerland
(pr4links.com)
12/07/2011
By Bob Helbig of the Journal Sentinel
http://www.jsonline.com/blogs/business/124236819.html
As the economy slowly recovers, and people return to work after long layoffs, the financial recovery begins. The California Society of CPAs offers these strategies for people to get their economic houses in order.
Reexamine financial goals. Before establishing a budget after being employed, examine financial goals. Start by making a list of short-term goals (e.g., new car, health insurance) and long-term goals (e.g., your child’s college education, retirement). Next, ask: How important is it for me to achieve this goal? How much will I need to save? Armed with a clear picture of their goals, work toward establishing a budget that can help reach those goals.
Identify and reexamine current monthly income and expenses and create a budget. Recently unemployed need to start by adding up all of their income. In addition to their regular salary and wages, they need to be sure to include other types of income, such as dividends, interest, and child support. Next, they need to add up all of their expenses which includes: credit cards and college loans, etc.
Next they need to see where they have a choice in their spending. It helps for them to divide expenses into two categories: fixed expenses (e.g., housing, food, clothing, and transportation) and discretionary expenses (e.g., entertainment, vacations, and hobbies). They will also want to make sure that they have identified any out-of-pattern expenses, such as holiday gifts, car maintenance, home repair, and so on. To make sure that they are not forgetting anything, it may help for them to look through canceled checks, credit card bills, and other receipts from the past year. Finally, as they list their expenses, it is important for them to remember their financial goals. Whenever possible, they need to treat their goals as expenses and contribute toward them regularly.
Once they have added up all of your income and expenses, they need to compare the two totals. To get ahead, they should be spending less than they earn. If this is the case, they are on the right track, and they need to look at how well they use their extra income. If they find themselves spending more than they earn, they will need to make some adjustments. They need to look at their expenses closely and cut down on their discretionary spending. And they need to remember, if they find themselves coming up short, they don’t need to worry! All it will take is some determination and a little self-discipline, and they will eventually get it right.
Consider consolidating debt to get monthly payments down to reduce expenses. If a recently unemployed worker has a lot of debt, they may want to consider debt consolidation. Debt consolidation is when a person can roll all of their smaller individual loans into one large loan, usually with a longer term and a lower interest rate. This allows them to write one check for a loan payment instead of many, while lowering their total monthly payments.
Pay off credit cards. If you have card debt to repay, consider looking at the highest interest rate to pay-off first while keeping up with the minimum payments on the others. The key point is to keep bringing down your debt.
Monitor the budget. Recently unemployed need to monitor their budget periodically and make changes when necessary. But they need to keep in mind that they don’t have to keep track of every penny they spend. In fact, the less record keeping they have to do, the easier it will be to stick to their budget. Above all, they need to be flexible. Any budget that is too rigid is likely to fail. So they need to be prepared for the unexpected (e.g., leaky roof, failed car transmission).
Be aware of guide posts to stay on track.
Involving the family and they need to agree on a budget up front and meet regularly to check their progress.
Staying disciplined and try to make a budget part of their daily routine.
Starting a new budget at a time when it will be easy to follow and stick with the plan (e.g., the beginning of the year, as opposed to right before the holidays)
Finding a budgeting system that fits their needs (e.g., budgeting software)
Distinguishing between expenses that are “wants” (e.g., designer shoes) and expenses that are “needs” (e.g., groceries)
Build rewards into the budget (e.g., eat out every other week)
Avoid using credit cards to pay for everyday expenses. It may seem like you’re spending less, but their credit card debt will continue to increase
Start over and begin building a cash reserve for emergencies. CPAs suggest that unemployed workers have three to six months’ worth of living expenses in your cash reserve. The actual amount, however, should be based on their particular circumstances. Do they have a mortgage? Do they have short-term and long-term disability protection? Are they making car payments? Other factors they need to consider include their job security, health, and income. The bottom line: Without an emergency fund, a period of crisis (e.g., unemployment, disability) could be financially devastating to a person and their family.
Review your credit reports. Find out the damage unemployment did to your credit by getting your credit reports from the three major credit bureaus. Get a free copies at annualcreditreport.com or by calling (877)322-8228. Correct any inaccuracies. To restore good credit, repay debt and make sure you consistently pay bills on time.
Don’t forget to start saving for retirement. Keep moving forward on retirement savings. If necessary start small but the sooner you start saving for retirement the better off you will be. Saving for retirement needs to be one of your top priorities. Participate in your employer’s retirement plan.
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