The economic outlook may be gloomy, but you can brighten your own financial picture in the new year by taking some simple steps, say two local advisors, one financial and one spiritual.
Lon Bone, vice-president of public relations and community involvement for Genisys Credit Union, 250 N. Ortonville Road, said the first step in improving your bottom line is to figure out how you are spending your money. Begin by writing down everything you spend money on for two weeks.
‘Literally list everything you spend, and then you can analyze where you are spending all your money,? he said.
Bone suggests setting up categories for groceries, housing, utility bills and car payments, but also for miscellaneous purchases including candy, cigarettes, coffee, etc.
‘You might be surprised,? he said. ‘Before you save, you have to learn where you are spending.?
A lack of planning, Bone said, is the biggest mistake people make with their finances.
‘It requires you to sit down and think, and we have become an instant society,? he said. ‘You really need to put a thought process behind it? ‘how am I spending my money?? If you get the extra TV, you might not have the money for a necessity. Take a look at what you really need compared to what you want.?
After keeping the 2-week journal of every expenditure, the next step is to look for future expenses. Bone uses Christmas as an example, suggesting that those wishing to become financially savvy tally what they spent this year and divide that amount by the number of pay periods left before next Christmas, then taking the dollar figure and putting it in a savings account each pay period. The same can be done for home or car insurance, for which policyholders typically pay a monthly surcharge, but can avoid it if payment is made in full when the policy period begins.
Bone also advises shopping for new insurance. He had neglected to do this himself for many years, but saved $900 this year by changing policies, and got better coverage as well. Save on your phone bill by doing the same? pricing out different carriers. Other utility bills can be reduced too? the electric by changing to energy efficient light bulbs, the heating bill by dialing down the thermostat at night or when no one is home.
Carrying credit card debt? Bone recommends paying any extra money you may have to the card with the highest interest rate, and then as soon as one is paid off, apply the money previously spent on that card plus extra to the next one? and stop using the credit cards and start using a debit card.
Dave Gerber, pastor of Lake Louise Church of the Nazarene, and his wife Ruth, got a handle on their outstanding debt by using a different method? the debt snowball advocated by financial guru Dave Ramsey in which the smallest bills are paid off first, regardless of interest rate, and then those payments are applied to the next smallest bill.
‘We prioritized our bills and the debts and paid them off from lowest to highest,? Gerber explained. ‘We put any extra income toward paying bills.?
The Gerbers also built an emergency fund of between $500 and $1,000, another tip from Ramsey’s Financial Peace University.
‘People who don’t have cash on hand have emergencies,? laughed Gerber. ‘People with cash don’t have emergencies.?
After paying off all debt except for their mortgage and a portion of his student loans, the Gerbers moved on to the third step? an emergency fund to cover six months worth of living expenses.
‘It all makes sense, just because you are systematic in your approach and sacrifice a few things now,? he said. ‘Financial Peace University is going to be a cornerstone here, because we, as a society, need to get a handle on our finances. We are run by our finances, we don’t run our finances.?
Lake Louise Church of the Nazarene is offering Financial Peace University for 12 weeks, beginning at 6 p.m., Jan. 10 at the church located at 2300 S. Ortonville Road.
‘Since finances are one of the big new year’s resolutions, this has been a great program,? he said. ‘It’s a big enough deal that we will offer this class continuously, so instead of people being ruled by their money, they will learn to use it and use it wisely.? Details: 248-236-5141.