Savings!  You know you should have it, but saving money when you are already on a tight budget is difficult at best.   The standard for an emergency fund is 6 months of savings.  So how the heck do you do it?

Treat Savings Like a Bill

If you have read the rest of this series you have purged your budget of the extra expenses that you didn’t even know you had.  Those are a tough habit to kick.  This will likely take some time.  Some people take weeks, some take months.  Give those changes time to kick in.  In the meantime, treat your savings like an expense.  Something that has to be paid every payday first.  It is now a bill.  If you treat it like a bill you will find yourself a bit more inclined to take saving seriously.

Automatic Transfers to a DIFFERENT bank!

That’s right — automate it to a bank so you have to work to get to it.  I like to use online savings for this.  Ally and Barclays both offer high yield rates, no brick and mortar locations, and no debit cards.  They also offer automated transfers from your checking to your savings.  This means that you will have the money taken out of your account before you even know you have it AND you will have to set up transfers and wait whole days to get at it.

True Emergencies ONLY

Going on a cruise is not an emergency.  You should not be dipping into your emergency fund for this.

I am a big fan of having three accounts in your online savings:

  1. your emergency fund;
  2. our non-monthly expenses fund; and
  3. your fun fund.

You should contribute to these accounts at each pay period.  Want to go on a cruise – grab from the fun fund.  Need to get an oil change on the car – go to the non-monthly fund.  Hospital bill for the emergency room when your kid decided to take a header at the playground and needed stitches – That is an an emergency. You can go to the emergency fund for that.  Got it?

Now if you are drowning in debt, saving is going to be near impossible at best.  Interested in how we can wipe out your debt so you can actually save a few bucks?  Give us a call at 732-302-9600 or fill our our online consultation form and we will call you!

By: Sarah J. Crouch

The first step in establishing any kind of new financial existence for yourself is to make sure that you know where you are right now.

I know.  This sounds basic.  And you probably have a one word answer for the “How are my finances now question?”

BROKE.

This may or may not be true.  I have lost track of the number of times I have told my clients that they should have money left at the end of the month and been called an insane person.  So I say, well let’s look at the bank statement and when I am done taking out all of the absolutely unnecessary expenses, my clients are a little surprised by how much money they have arguably thrown into a pit and set fire too.

So here is where we start:

Get out your online bank account or bank statements and make a chart with four columns on a piece of paper.

Income    Expenses    Luxuries      DEBT

(I know…I know…you don’t have any luxuries in your life…we will get to that.  I swear I am not an insane person.)

Now, take a look at your bank statement and under each of those headlines put in the pertinent information.  Under income, put all of your income in there, don’t forget to account for regular expense checks.  Under expenses put actual expenses only.  I am talking about Utility Bills, Mortgage, Groceries (don’t include trips to Target where you also bought a scarf or jeans).  I don’t want to see trips to McDonalds or Dunkin at lunchtime.  Only actual necessary expenses.

Now, under luxuries, put the trips to Dunkin, McDonalds, Starbucks (GUILTY), the scarves at Target (SUPER GUILTY), and all the little extras that we all spend money and don’t think about.  I want you to put every single one of these that you spent money on in the last month in that column and add it up.  Scary right?  How high is that number?  I know when I did this for myself it came to about 150 bucks, and I am fairly good about the fast food.  I don’t eat much of it….now Starbucks and Target…that is another story.  My assistant figured out that between her and her son she was spending about 250 bucks  a month on fast food.  We all do it.  We are all guilty, you are not a bad person for having a high number here, this problem sneaks up on the best of us.

Now let’s take a look at the debt column.  Are these balances on the rise, are they revolving but you aren’t making a dent?  Are you having trouble keeping up with the mortgage?  Medical bills?   Is the whole situation a giant house of cards that will fall as soon as you have a kid need to stay home sick from school?

Now, here is the fun part.

Take this chart and make an appointment with a financial professional, an accountant, a financial planner, a bankruptcy attorney, for a consultation with someone that can help you.  Someone with a license, a degree, and a pile of happy clients, not your brother who does his taxes with H&R Block every year and seems to be good at math or your sister that filed bankruptcy a few years ago and knows everything about it.  Instead, discreetly ask around to see if anyone knows one someone that has helped them with financial issues.  You will be shocked by how many of your family, friends, and colleagues have been in my office.

I see a lot of new clients this time of year.  People walk into my office and say, “I just can’t do it anymore” or “I don’t even know where to start”.  We go over their income, expenses, debt, and general financial issues and decide how best to attack this problem.

Sometimes the answer is a bankruptcy case.  Sometimes it is just the best way out.  I say this because a lot of people think that bankruptcy should be a last resort.  I disagree.  I wish more people came to before it was the only way out, back when it is the best way out.  This means I am not racing a garnishment to the courthouse door.  We are on the offensive in a financial situation instead of playing defense.

I say to my clients all the time, “If I could wave my magic wand and make all of these credit card and medical bills disappear, would you be able to pay your bills?”  99.9% of the time the answer to that question is “YES.”  If that is how you would answer that question, bankruptcy might be the BEST solution and not the ONLY solution.  This is an important distinction when you are assessing your situation as a whole.

Other times, more careful budgeting and watching that luxury column is the best solution.  Sometimes, thinking about a second part time job is the best solution.

This is what assessing the situation gets you too.  It gets you to a starting point.  DO NOT SKIP THIS STEP.  It is mission critical.

So you have your starting point, now what?  What is the plan?  Time to set goals and put together a budget!

Next time:  Setting A Goal and Making a Budget

 

Interested in how we can help you file bankruptcy or assess your financial existence?  Give our office a call at 732-302-9600 or fill out our online consultation form and we will call you!

It is that time of year.  We are all making resolutions to be fitter, lose weight, save more money, be happier, the works.

We are all making promises to ourselves.  This is great.  It’s wonderful when people resolve to improve themselves.  Better yet, this is the only time of year that we seek a plan.  EVEN BETTER.  Without a plan a goal is just an idea.  If you don’t have a plan for how to get there, it is going to be difficult if not impossible.

So I’m here to help with your financial goals.  You want to get out of debt, save more money, maybe get solvent in such a serious way that you can afford a new splurge.  Awesome!  But how do you do it?  Where do you start?

I say you start from the beginning, a very good place to start.  So I present to you the New Year, New Financial You blog series!  I am going to post articles throughout the month of January on how to start cleaning up your finances,  how to set a goal, stay on budget, save, deal with obstacles and knowing when you get to splurge and when to walk away.  These are incredibly valuable skills that will take time, discipline and patience to develop — just like your weight loss and fitness resolution.

Even better, I am going to do them along with you to show you how to make them work!  As it turns out, bankruptcy attorneys have budgets too!  I will share savings tools, web and mobile applications I love and hate and programs I use in my home to stay on task and on budget.  I will share what works, what doesn’t, and how to adjust things to make them work based on my own experience in using these tools.

We will talk a lot about timing because, to be perfectly honest, I feel that timing is everything, particularly for pre and post bankruptcy clients.  For example, certain savings tools are great post bankruptcy when your goal is to save but not so great prior to a bankruptcy when the goal is different.

Currently the plan for the articles will go as follows:

Assessing the Status Quo

Setting Your Goal

Budgets, Budgets, Budgets

Tools for Saving

Dealing with Financial Obstacles

When to Spend for Fun!

Requests for additional topics are welcome, diversions from this subject will happen!  I am more often than not inspired by what I hear in the courtroom, from colleagues, from clients, and things I see in social media.

So here we go.  New Year, New You, Happier Savings Balance.

Happy New Year!!!!