Cold French Fries . com » financial plan

Calculating Your Personal Finances

marcus — Thu, 29 Apr 2010 12:27:46 +0000

You have a tri-merged credit report and gathered any collection letters in your hand. You are now on your way to the easiest part of regaining control of your personal finances. First, we need to understand what percentage of your income (take home pay after taxes and deductions) is owed out each month. Divide each debt by your take home pay and you will reveal the percentage of your money that is being used each month for the individual debt.

Example:
Monthly Income – $2,400
Monthly Housing Payment – $975 975/2400 = 41%
Monthly Auto Payment – $245 245/2400 = 10%
Monthly Credit Cards – $125 125/2400 = 5%

Idealistically, your entire monthly debts should not equal more than 50-70% of your monthly take home pay. If you are living outside of that percentage area…lower is great, but on the higher side…then you are running the risk of financial collapse should you or the economy ever stumble again….and it will stumble again If your numbers mirror the above example then its time to get the red pen out and contact your creditors to negotiate a new lower payment. Base your requesting the reduced payment on the percentages and record their exact responses and remember to get any offers they extend in writing. And lastly, do not make any decision to pay one group without reviewing the totality of your new financial recovery plan. Its a good idea to start allowing an overnight time period before making financial decisions.

Next time, we will further discuss the conversation and the follow up with your contact with creditors, so you can begin feeling the effects of a recovering personal finance plan.

Understanding the Numbers

marcus — Fri, 05 Mar 2010 12:00:57 +0000

Okay, remember those numbers. Don’t know which numbers? Then go read, Getting Back on Track. The numbers of which I’m speaking represent your total monthly expenses / bills and your total monthly take home pay. Divide the monthly expense amount by the total income. That quotient (answer) will represent the percentage of your monthly income is committed to expenses each month and is called the debt to income. Example: $1500 monthly expenses divided by $2000 monthly income = 75% debt- to-income ratio. The debt to income should be in the area of 50%, however, many families live with that number closer to 75% and many times over 100%.

Review your expenses and make determinations if any of those monthly expenses can be reduced to allow for more monthly disposable income. Disposable income is money received that is not committed to paying a debt. We want to increase the disposable income, so that we can create a pool of “non-obligated” funds to be use to offset debts that weigh heavy on the monthly expenses because of high interest rates or maybe even drawn-out repayment plans. ..either way, the objective is to create some temporary financial breathing room. Once you have reduced your monthly payments to the lowest allowable level, you will be able to start aggressively paying debts you will later label as priority. Next we will talk about categorizing debts by priority and developing a strategy to eliminate more debt.

Getting Back on Track

marcus — Wed, 03 Mar 2010 20:00:04 +0000

Well, it beginning of the 3rd month of the year and droves of people that promised to hit the gym and start a savings plan have decided to revert back to their old habits and abandon their New year’s resolutions until… next year. However, if you are reading this then you are still in the gym and serious about getting your personal finances in order. Well, the first thing to consider is where you stand right now. How much do you earn and to whom do you owe a portion of those earnings.add all those balances and monthly payments and write those figures down (we’ll come back to those numbers). But if you are like most, you cannot begin to imagine just how much you really owe and to whom you it. So the best two places to start is your mailbox and by requesting a credit report from each of the three major credit reporting bureaus (Equifax, Trans Union, Experian)
Don’t jump on the first free credit report offers you find. Many companies offer free credit reports, but then sign you to a monthly subscription commitment. And if you default on the monthly agreement or forget to cancel, they continue collection and ding your credit profile if you fail to satisfy your contract. Depending on the state in which you live, you may be entitled to one free report per year from each bureau. Go to the bureaus websites and explore the sites before signing up for anything….you may have to request the credit report by mail, but there’s more to do while you are waiting for your report in the mail (remember those numbers…we’ll get to them)
Be sure to review and compare the information from each of the 3 reports…yes, they do report different information. Discrepancies on your credit report should be disputed and documented with the reporting creditor. Make sure to maintain copious notes and meticulous records of any correspondence with creditors on all concerns and disputes…and request all resolutions “offered’ and/or ‘agreed upon’ in writing.

These credit reports will provide you access to your entire consumer debt history with an exception to living expenses…i.e. housing, utilities, food, clothing, et cetera. However, the credit report provides information you will use to gain a better idea of where you financially stand and which direction/s you should move first.

Tune in next time for “what to do with those numbers”

Opening a Childrens Savings Account

marcus — Mon, 22 Feb 2010 12:00:49 +0000

The list of items to which your kids wants to buy is beyond anything that you could ever have imagined, but now is the time to give them a dose of reality in the form of perspective and priority. Everything they want is not necessary and some items may have priority over others. This is not different than teaching your kids to stay clear of fire not just because its hot but because its dangerous to them and everyone around it. However, as your kids are chomping at the bit to hit the candy store, head to the bank and open a savings account. A savings account is a great tool to help them properly manage funds and is key to starting a good financial education. Always incentivize their bank visit efforts with a treat each to encourage increased visits to the bank. I offer an extra dollar or two if they schedule bank visits with me and even more if they walk to the bank to make ATM deposits. If the day is nice, bank visits for deposits are rewarded with ice cream…okay that’s for me, but you get the picture. I want them to associate dealing with their finances as a privilege and not a task or act of labor. Make a small, if not big, production of their opening this bank account by making conversation on the subject leading up to the day and moment and afterwards. Take pictures during their opening transaction and present them with a wallet or record book in which to record their transactions and later to illustrate account reconciliation with account statements and their personal records. Opening a bank account is great but using the account is a larg3e component to a good financial education. Make sure to call relatives (grandparents ) to inform them of the account, not to request money, but to develop healthy conversation with adults the kids like, so that there is a positive re-enforcement of the act of saving. Remember that placing the money in an intangible account may lead to a slight disappointment to a kid. They relate the bank to the last moment they had money in their hand…and now its gone with nothing to show for it, so some pictures, phone conversations with loved ones that use a bank and an account statement with a balance in their name can go a long way for a kid that’s nervous about where their money goes when they leave the bank.

Finding Something to Buy

marcus — Thu, 18 Feb 2010 12:00:16 +0000

Each time I earned some money as a little boy, my mother used to say to me…”that money is burning a hole in my pocket.” She was referring to my insatiable urge to spend my new found wealth on the first thing that offered itself for sale to me. I had no reason for earning the money other than to buy the items that were most appealing to me…such as candy and toys. However, as I became educated (and older) I realized there was much more to which my hard earned money could be applied. The same is the case with your kids. Point out the financial and economical aspects of educational lessons, such as history, everyday life and as well as the finances tied to their dreams and desires. Helping your kids to understand the cost (in a relation to money and time) will assist your children to begin setting goals that will make dreams more of a plan at an early age. Please DO NOT discourage any goals because dollar amounts are seemingly high, based on present financial conditions and experiences. We want our kids to think realistically about money, however, with a well structured and grounded financial sense , today’s kids will be able to go further than we ever thought because of an understanding of money of which we could only have imagined. A good place to start exploring the effects of money is a downtown shopping area or library…although there’s probably more on the internet…these physical areas provide tangible items to compare to real costs. Either way, try to interest your child in something other than candy and toys or at least exposed to the manufacturing or transportation aspects of their interests. You can even watch television and explain marketing and costs of a show’s production i.e. – actor’s pay, studio/real estate, electricity, satellites, etc. Try not to make every conversation about money, but do point out the financial basics, no different than you would make passing references to good and bad food choices.

You Cannot Win Unless You Play

marcus — Thu, 21 Jan 2010 04:47:31 +0000

Did you check the lottery numbers today? You know, if you don’t play u can’t win….well the same concept applies to being on the winning side of your personal finances and becoming financially literate. Many people think they will get their personal finances in order after they are in receipt of a bunch of money. But in reality from where do you think the “bunches” of money originate? If you said, your own efforts…then you’re right. You have to take a stance against your own habits to break free of the repetitive and less than exciting financial cycle in which your personal finances exist. So check all your coat and pants pockets, couch cushions, piggy banks or hiding places and pull some money out to put away the first piece of many to create the bunch of money for which you are waiting. This area is a magic, one way hole …only an entrance….for now. Congratulations. You are now really on your way to better finances partly because you have something at stake. You always have had something (your financial security) at stake, but now you will want to learn more about money that is seemingly sitting somewhere within arm length…just waiting to be spent…and we will spend it, once you become more financially literate. Stay tuned.

Financial Present, Future & Possibilities

marcus — Thu, 07 Jan 2010 12:30:01 +0000

When considering your finances, there are three areas that should dominate your thoughts…current cash situation, desired financial future and possible financial devastation. Current cash situations can be summed up quickly, by outlining all household incomes. Desired financial future is determined by what is done with said income in the terms of managing a regular budget and developing (and adhering to) a well structured investment strategy. However, planning for the financially unforeseen is the easiest for which to prepare, but most often ignored. There are a variety of insurance products to aid when income and investments are non-existent. Some people consider insurance a plan to fail, but its more of a safety net to ensure all the hard work and financial discipline does to disappear should a shot in the dark accident occur. Speak with a variety of investment counselors that offer insurance products as each product changes from company to company. Make sure to consider your health history (personal and family), physical demands of your profession and the future prospect of employment or retirement (voluntary and involuntary) when discussing insurance needs. Attention to these three areas of finance when designing a path to financial literacy will aid in a sure-footed path to perfecting your personal finances.

Ready, Set, Goals!

marcus — Wed, 06 Jan 2010 12:30:48 +0000

Before you can start your journey to financial literacy and well managed personal finances, first establish your financial goals. Without describing the finish-line or pit stops, exhaustion and frustration will soon loom over future personal efforts, thus lessening the chances of follow-through when a money crunch occurs or important financial decisions are made. Establishment of goals should be motivating and lie as an incentive to maintain regular participation and adhesiveness to the path of achieving those goals. Don’t just establish large goals that are only realized at the end of the year/term. Provide periodic benchmarks to check your status and to allow for small victories…end zone dancing is allowed. Make sure that goals are realistic and personal. Developing goals based on other people’s thoughts and wishes are a great way to abandon a task. Make sure the goals will affect you and that there is a real degree of selfishness in the achievement of at least a component of the goals to insure inner-self motivation. Even though the new year resolutions starting gate has opened, you will run a much more efficient and satisfying race by putting a little extra thought in your path, rest stops and finish line.

Reclaiming Your Finances

marcus — Thu, 03 Dec 2009 01:44:15 +0000

If you are like millons of Americans you are seeing the glimmers of evidence that the economy is turning around. The three years the nation has suffered under the failing economy has tested the financial planning abilites of most households. However, as you face your future and decide upon financial directions to travel, remember the number one rule of reclaiming your finances….address your issues head on. Call your creditors and at the very least, acknowledge them and try to design a debt management workout plan. Its best to consult with an attorney on the possibilties and consequences of bankruptcy, but ignoring your debts could lead to future financial stumbling blocks. Stumbling blocks such as law suits that could lead to judgements, garnishments of bank accounts or income. Oftentimes these garnishments come “without” warning until after lein have been placed on assets…however, the real warning is coming right now. If you owe…don’t simply think that these debts will just somehow fix themselves…you have to act.

Holiday Financial Fitness

marcus — Tue, 24 Nov 2009 17:58:51 +0000

No time of the year can be more detrimental to one’s personal finances than the next 6 weeks of holiday celebrating and shopping. Between, shopping for gifts, preparing large meals, entertaining and friendly gatherings, a household budget can become strained and cause people to rely on credit cards, savings and even expensive payday (or auto title) loans. Many employers pay employees early during the holiday season so future income can be used to manage the increased expenses that accompany holiday preparations. However, households need to adhere to financial plans and their holiday budget…you should have a budget for holiday shopping…a holiday budget can help prevent the “too good to be true” moments in shopping and picking up the tab after running into the old friend at the bar. Don’t get caught in the trap of using too much of your early holiday pay before the month ends. This could lead to a shortage of available cash to carry your personal finances into December. And remember gift giving month of December is notorious for robbing households of the gift of financial stability.