VOL. 128 | NO. 208 | Thursday, October 24, 2013
Rays of Wisdom
Dana and Ray Brandon
Could You Be Facing Disaster?
By Ray and Dana Brandon
Ray’s Take Studies claim 70 percent of Americans are a mere three weeks from being unable to pay household bills – largely because they live paycheck-to-paycheck with little to no reserves to fall back on if anything out of the ordinary happens. This is not just at the lower income strata. It includes high earners too.
Inevitably, something out of the ordinary will happen because no one actually lives a charmed life. The tipping point could be anything from a job loss to a health issue to financial losses due to liability exposure.
If you typically check to make sure your latest paycheck has cleared before you pay your monthly bills, you might want to keep reading.
Here are a few of the warning signs: more than 20 percent of your income goes toward loan payments; you have less than six months’ expenses in an emergency fund; you’re anxiously awaiting the next limit increase on your credit cards; or you regularly pay less than the full balance on your credit cards.
Falling into the credit and loan trap and putting yourself at financial risk is easy. Getting out – not so much. Many people assume that when a company is willing to lend you the money or set a high credit limit that it is a good thing. That’s not necessarily true.
Instead of thinking, “How much will the payments be?” focus on the actual cost, and that’s including the cost of interest if it’s a big item (like a car) that requires a loan.
However, the single most important thing you can do to protect yourself from potential financial disaster is develop a monthly budget that includes savings – even if you have to give up little luxuries – and then stick to that budget.
When financial setbacks strike, having that savings could make all the difference in the world.
Dana’s Take Staying in denial about your financial situation doesn’t make it get any better. Setting aside those credit card bills till the last possible moment because you simply can’t stand to see how much you owe is not dealing with the problem.
If you have a spouse, involve your partner in finding the solution to your money woes. It may be one of you has a better head for figures or a stronger idea of monthly expenses. If it took two people to get you in a precarious financial situation, then those same two people should work together to resolve the situation.
If you’re single and feeling lost, reach out for an accountability partner. It could be a friend or church member. The partner isn’t responsible for fixing the problems, just listening and supporting you through taking action.
If you still feel overwhelmed, get professional financial advice.
Dealing with debt is easier to face when you know you’re not alone.
Ray Brandon is a certified financial planner and CEO of Brandon Financial Planning (www.brandonplanning.com). His wife, Dana, has a bachelor’s degree in finance and is a licensed clinical social worker. Contact Ray Brandon at firstname.lastname@example.org.