January 2005

Soldiers, Families and Money

• “Whenever Pat calls home from the military post, the conversation starts out fine but then it gets really tense when we get around to the topic of money. We fight a lot about money – only now, it is long distance.”
• “While Robin was deployed, I scrimped and saved every dollar possible, dreaming of how we could make a down-payment on a house. A week after Robin returned there was a new, shiny motorcycle in the driveway instead. I’m furious!”
• “I checked the balance on the credit cards and couldn’t believe how much we spent on gifts…”
• “Thank goodness gasoline has gone down in price; however, it’s still $30 to fill my car!”
• “I haven’t slept well for a long time. I do okay during the day, but thinking about our family’s financial mess keeps me awake at night.”
• “We don’t have even one thin dime saved for retirement or our child’s college expenses. Not one thin dime.”

What do all these people have in common? They feel like their family finances are out of control. This is the time of year when people are especially stressed about family finances. Spend less time worrying by using these ten ideas for taking control of your finances.

Ten Terrific Tips

1. Whose job is it to take control of your financial situation? Point that finger right at yourself first, and then ask your family members to join you. What are your financial goals for 2005? Begin by looking forward – as individuals, and also as members of a family. What do you want to do in 2005? What do you want to be? What do you want to have? What do you want to contribute?

The people making the comments above might have answers like:

• I want to have fewer arguments about money with my spouse.
• I want to have our own home.
• I want to do more things and buy fewer items at gift-giving time.
• I want to have a more fuel-efficient car and be more conserving of gasoline.
• I want to be less worried about money and have a better night’s sleep most nights.
• I want to contribute to a regular long-term savings plan.

2. Run from predatory lenders. Have you noticed how there are more all the time? Predatory lenders are very expensive sources of credit. Their annual percentage rates of interest (APR) used to average about 365%, however, their APR’s are now often between 600% and 700% when an annual percentage rate is calculated. Examples include many of the refund anticipation loans, title loans, payday loans, rent-to-own, and loan consolidation places.

3. Speaking of credit, there are three good reasons to take on long-term debt. Guess what they are. You may be surprised.

• A quality home. Shelter is a necessity – especially during the winter. For many of us, a home is our major asset and, if selected carefully and maintained, the value of our home will go up over time.
• A quality education. An ability to earn a living and education tend to go hand-in-hand. At a minimum, a person needs to finish high school. One of the best investments a person can make is to get an education beyond high school to add additional knowledge and skills that are valued by employers. Invest in yourself to have a competitive edge in the work world.
• A quality business. Going into debt to buy a business that has a reasonable expectation of helping you earn a living is third on the list.

You may be startled at this short list. Many of us use credit cards for convenience to purchase consumer items. The goal, though, is to pay off the credit card bill in full each month to avoid paying interest on consumer items.

4. Legal problems often result in financial problems, too.

• Accidentally writing a bad check
• Speeding
• Making a driving error and causing a wreck
• Not wearing a seat belt

Working to prevent legal problems is also working to prevent financial problems. They are too expensive, both in money and energy, to solve.

5. You cannot borrow your way into financial health. Overusing credit is like digging your financial grave. If you’re in a financial hole already, quit digging!

6. Pay yourself first. Financial security isn’t so much about how much income you have as it is about how much of your income you choose not to spend. Set aside money for emergencies. Without savings, even a flat tire that must be replaced can send your family into a financial crisis.

7. Get organized financially. Sort your mail over the garbage and be selective about what comes in the house. Open your important mail and deal with it. Do not ignore it. Have one place in your home designated for financial papers, as opposed to having papers all over the place.

8. I dare you and your family to keep track of spending for one month. Anyone that is old enough to participate in tracking spending. If you’ll take the “Crawford challenge,” I guarantee you’ll learn something.

9. Separate needs from wants.

No one wants you and your family to do without necessities. Make sure necessities are met – even if you have to ask for help.

10. Avoid identity theft. Never provide your mother’s maiden name, your social security number, birth date, bank account numbers & routing number, credit card numbers or other personal information without a VERY good reason for the person asking to have it.

Ready to learn more? Great!

The federal government has a new “My Money” toolkit. Order My Money Toolkit

Also, I recommend taking a look at these sites:

Managing Your Money

Living Better on Less

Repaying Credit Debts and Loans

66 Ways to Save Money