The latest headlines and our 401k balances are painting a grim picture that is hard to ignore. Since the end of 2008, American consumers are coping with record job losses, stagnant incomes, rising debt and stalled savings.
One in four consumers says they are worried about making their monthly payments over the next six months, a four percent increase from last year, according to a recent Gallup poll. The silver lining to this dark cloud is that many consumers are now taking a step back and reexamining their lifestyle and the poor financial choices they’ve made through the last several years. We are learning from our financial missteps. We’ve lived beyond our means for too long, content to charge a life we couldn’t otherwise afford.
But make no mistake, things will get better, and once they do, will consumers go right back to their free wheeling, spend all you can habits?
It’s anyone’s guess. Our relationship with money has become fractured. Consumers must reconsider how they’re managing their finances. Everyone should know how to manage their money and live within their means. We are seeing signs that the tide turning in how we are managing our money. Consumers are limiting their retail spending. More and more consumers are reaching out to credit counseling professionals to help with their financial woes. In the first quarter of 2008, BBB | Greater Maryland received 12,688 consumer inquiries for businesses providing financial services, debt negotiation and debt counseling services. Over the same period this year, your BBB received 20,504 inquiries for those services.
Now’s the time to embrace a budget. Establishing a household budget to track monthly spending is the first step in taking charge of your money. It’s empowering to be in charge of your spending instead of sliding further into debt.
- Find a system that works for you. There are many tools and techniques to track expenses. A simple worksheet with sections to track monthly income and expenses is all you need to take charge of your money.
- Track it. Write down everything you spend, so you know where your money is going. Then, you can make smart decisions about what you really need to spend money on and where you can save.
- Start a savings cushion. Start small with a goal of saving five percent of your paycheck in a traditional savings account and another 10 percent of your paycheck in an emergency fund for unexpected expenses. If you’re getting a federal tax return this tax season, consider using the money to start an emergency fund.
Consumers who still struggle to meet financial commitments and continue to rely on credit cards to help cover the cost of basic living expenses should consider seeking assistance from a professional debt management organization. But consumers must do their research and check their providers against certain criteria.
- Reputation - Check with the Better Business Bureau to verify that the provider you plan to work with is accredited by the bureau. Also make sure your provider is licensed or authorized to do business in your state.
- Open book – Your provider should clearly state the services you will receive.
- Informative – Provides free budget analysis, as well as financial and money education.
- At your service – Offers one-on-one customer service available with multiple contact methods to meet your needs (online, phone, email).
- Affordable - Charges limited fees for debt management services, no more than $50 per month, with a minimal upfront fee of no more than $50.
Consumers will continue to ponder the financial mistakes they have made in the past, but let’s hope we don’t repeat them when the 2009 Recession is a distant memory. Now’s the time to acquire healthy money management habits that will help us weather future financial storms.
This article was provided by CareOne Services’, Debt Diva, Clarky Davis. For more information, visit them at www.careonecredit.com .