These have been a rough couple of years. Struggling economy, job losses, benefit cuts, rising costs for medical, fuel, food and just about everything else. Although we are not fully in the clear yet, things are beginning to look up. Suzanne Klenk from Washington State Employees Credit Union joined Margaret to help us figure out where we go from here.
If you have experienced financial difficulties, Suzanne has a few key steps to help you get on the path to financial recovery sooner than later.
Suzanne: We are in crisis here in the United States. Many of us could not cover a $3,000 emergency without using credit nor could we cover one month’s worth of expenses if we were to miss a paycheck. This must change if we are to pass on a better life to our children and retire with dignity ourselves. It’s important to understand that recovery isn’t easy, nor is it fast. Don’t expect results overnight…DO expect to make difficult decisions.
Step 1 – Do a “Damage Assessment”
Where are you now? How much debt do you have? Has your debt increased in the last year? Are you behind on any payments? Sit down and get it all down on paper…everything. If you are married, you must do this together. You can’t move forward if you have no idea where you are starting from.
Step 2 – Pull your credit report
Your credit report will give you the information you need to complete step one. Knowledge is power and when you know exactly what you are dealing with you can take your life back.
Step 3 – Make what you have….enough. (This is the hardest part)
Make the decision not to go any further into debt…not one penny. Set aside your credit cards and overdraft protection and live on what you have. Do not buy anything that you cannot pay cash for…nothing.
Step 4 – Plan to Spend. It is time to get our priorities straight, for real.
Create a spending plan on paper before the money comes in. This must be done every month because things change and you have to change with them. Your spending plan should begin with savings and then your four walls. Shelter (Rent/Mortgage), Food, Utilities (Heat/Electricity), Transportation (Fuel/Public Transportation). THEN, you begin working on paying your debt. Too often I work with people that will pay Visa and not get the medication they need to stay healthy.
Step 5 – Get an Emergency Fund in place
1,000 dollars in an Emergency Fund Account in 30 days. If you make under $25,000 per year, make that $500. This is not an option, it is critical for your future well being and the success of your recovery. I have a few suggestions:
Once your debt is paid off, go back and fully fund your emergency fund. 3 to 6 months of expenses.
Now, no one expects you to do this on your own. Reach out of support and assistance. Friends and family are a great support system when you are making difficult changes in your spending. And your Credit Union is an excellent resource for your financial needs. Get assistance developing a spending plan. Talk with your member consultant about ways to help…maybe a loan modification or deferred payment. Ask about services that will be of assistance to you while you get back on tract. It is all there for you. The credit union exists only to serve her membership. $5 still carries a bunch of weight at your credit union. With a $5 deposit into a share account, you are a member/owner and all of the expertise and knowledge within its walls is waiting to help. Call your credit union today!
For more information about WSECU, click HERE.
If you'd like to contact Suzanne to conduct a FREE financial workshop for your business or organization, email her: SKlenk@WSECU.org