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7 Steps to Financial Stability
1. Acknowledge that you are ready to change the way you behave with money:
- The way we view money plays into the way we spend money. In order to make lasting change occur we need to be ready to change some of our financial habit.
2. Determine what your montly income and expenses are:
- Take time to write down how much money (net income) is available and what expenses need to be paid each month. We have to know what we are dealing with before we can make a new plan.
3. Create a spending plan that works for you and your family
- Make a plan on how to best spend each payroll check. Don't forget to budget for groceries and gas and incidentals. Be willing to sacrifice some things in order to get your finances back on track.
- Find a way to put money into saving each month. If you can master getting money into savings, then you begin to create "positive options" for you and your family.
4. Begin to live with your income
- We need to find a way to keep our expenses within the household income. So often we live past our household income by using credit cards, small bank loans, pawn shops, payroll advances, payday loan companies or borrowing from family or friends. All these require repayment eventually. If you are serious about getting off the financial crazy cycle, you must start by staying within your household income. Build your spending plan according to the income you have and you will start to see positive results.
5. Get stable with steps one through four
- If you can do well with steps one through four you are on your way to financial stability. You will most likely be able to say that the above steps are difficult, but that you are seeing some results. If you experience a financial setback we encourage you to start again with step one and move through until you get back on track.
6. Begin to repair old credit
- Once you have a handle on steps one through five, it's time to consider paying off old debts in order to repair your credit.
- Since you have mastered a spending plan, you have a snap shot of how much monthly income is available to start paying off old debts.
- Get a copy of all three credit reports (Transunion, Equifax, Experian) at www.annualcreditreport.com . These reports are free and you will want to look at them at least once a year.
- Correct any errors on your credit report by following the disput procedure of each credit bureau.
- Start repayment of old debt by paying the smallest ones first.
- Keep good records and proof of payment. Do not throw anything away!
7. Begin to buld new credit
- It may be difficult to enter the financial world if we have or had negative credit. Start slow by building a healthy relationship with a bank you feel comfortable with. Get to know their personal loan officer and go as far to meet with them and let them know you are working towards building new credit.
- As you build this healthy bank relationship you can open a savings account and make steady deposits, open a checking and use it appropriately, and try applying for a bank credit card with a small limit of $300-$500, and then use it appropriately.
- Keep your debt load to a minimum. Even if you are approved for higher loan limits take caution. We never know when a status in our finances will occur.
The road to financial stability can be a steady and slow process. NEVER GIVE UP! The end result is very rewarding and will offer you options in the financial world.
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