Most of us tend to get at least a small dose of the blues over the long winter months, and sometimes, your finances can suffer neglect as a result.
• Several months’ worth of unopened bills and mail scattered around your home.
• You have not filed your taxes yet, even though you know you will be getting a refund.
• The inside of your purse looks like the inside of a trash can, or every compartment of your wallet is jam packed with so much garbage you could probably fill up a trash bag.
• Excessive shopping for no good reason. For me this might include late night shopping trips to the 24 hour Walgreens - even though I really don’t need anything.
• You’ve stopped paying attention to the balance in your bank account.
• You find random cash lying around your home, your car, or crumpled up in the pockets of your jeans, purse, or wallet.
If any of the above symptoms ring true for you, it might be time for a financial spring cleaning. Please understand that depression is a very real struggle and my suggestions here are not meant to be a substitute for medication, counseling or medical attention. My intention is to give you some concrete steps you can take to get organized and feel more in control of your financial life.
It can be really overwhelming to face your finances when you’ve been in a state of hibernation all winter long. Usually, when you realize your finances are a bit of a mess, facing the problem head on is the very last thing you want to do. You glare at the unopened bills scattered all over the computer desk, and instead of opening them, you play a video game, take a nap, or maybe go shopping.
My suggestion to all of you avoiders out there is to start with something external that needs your attention, even if it isn’t your finances. All I need to do is take a good look at the inside of my car to get a clue as to what type of mental state I am in. I’ve figured out over the years that the inside of my car is a metaphor for how I am feeling inside. When I feel like a mess internally, the external parts of my life, such as my financial state or the condition of the inside of my vehicle tend to suffer. Perhaps some of you can relate to this?
Tip #1: Pick a task you’ve been neglecting and complete it from start to finish
So, where do I begin? I start by cleaning out my car! Believe it or not, I would rather scrub the carpet on the inside of my vehicle than face my messy financial situation. If you just can’t bring yourself to begin facing your finances, then do something else that would be considered productive and healthy for you. Complete a task that addresses some other neglected area in your life. And sorry - shopping, naps, or beating the latest video game do not apply here. Clean out your car, your purse, your closet, or finish washing those piles of laundry.
You know what you need to do. You know the areas that need your attention, so pick one and just do it! When you accomplish one thing, your confidence goes up, you feel better about yourself, and you will be more likely to accomplish tasks in other areas. The important thing is to start somewhere.
Tip #2: File your taxes if you haven’t already
How many of you usually receive a fairly decent tax refund? According to IRS data, the average American typically receives more than $2,700 back at tax time. Although it might feel good to get that large chunk of dough each year, keep in mind that your monthly paychecks could be less as a result. If you are carrying credit card balances, then you are paying interest every month, while at the same time giving the government an interest free loan on your money.
Talk with a tax specialist about options for adjusting your withholdings, if necessary. Your goal is to maximize your take home pay without owing a tax debt at the end of each year. Perhaps with more income monthly, you can create a spending plan to avoid the need to borrow from high interest credit in the future. If you currently owe credit card debt, additional monthly income could allow you to repay these debts faster.
Take a good look at your bank statements so you know how much income you have in your account. If you are a person that typically uses a debit card instead of cash when making purchases, you should analyze a few of your bank statements so you have a better picture of your spending patterns.
Clean out your purse and/or your wallet and throw away or file all of those crumpled up receipts you’ve allowed to accumulate. Gather any cash or loose change you notice laying around the house and put it all in one place. On a particularly difficult year for me, I found over $50 worth of cash and change scattered throughout my car and my home. No joke. Make the decision to treat your finances with more respect than this. Keep your money in a neat and organized fashion. Set up a budget to ensure you are spending less than you earn each month.
Tip #4: Take care of your priority bills first
Start by sorting your mail in piles. All of your on-going monthly bills belong in one pile and your old debts will need to go in another. Then, take some time to review that pile of on-going bills. These are the bills you usually pay every month, or every few months, such as rent or mortgage payments, utility bills, insurance, or cell phone plans. When is the last time you took a closer look at your cable bill? Are you currently overpaying? Sometimes all it takes is a phone call to the company servicing your plan to get your monthly payments reduced. Have you ever shopped around for cheaper car insurance?
A little savings here and there can add up to make a big difference to your cash flow. If you are behind on any of your priority bills, then create a plan to catch up. Your monthly bills should be taken care of first before diving into that pile of old collection debts from the past.
Tip #5: Face your debt
Now that your priority bills are in order, you can focus on that stack of statements and letters for outstanding collection debt and/or credit cards. Sort these in piles so you can make a list that includes who you owe and how much for each outstanding debt balance. If you have multiple letters and/or statements for the same debt, you should put these all in the same pile and put the most recent statements at the top.
If the most recent statement you have is over a few months old, you can also request your credit reports for free once a year online through Annual Credit Report.com to get the most recent information. Your credit reports might also list any additional debts that need to be added to your list.
Sometimes, your financial situation might seem worse than it really is because you have not taken the time to face it, or you haven’t explored all of the options available to resolve the problem. At LSS, we counsel lots of people who come in thinking they are on the brink of bankruptcy, and end up leaving with a renewed sense of hope and a little spring in their step!
The Miracle of Debt Management
If you are juggling credit cards with high interest rates, a Debt Management Program (DMP) could be the answer you’ve been looking for! A DMP with LSS might not only reduce all of your interest rates and allow you to repay all of your credit card debt in less than five years, but it also simplifies your life with one consolidated monthly payment and one due date for managing all of your credit card balances!
Create a plan
If you are overwhelmed with piles of old collection debts and/or unpaid medical bills, take some time to actually open your mail and sort through these. You might just find that you actually owe less than you thought. This tends to be the case with medical bills or collection debt because you will typically receive multiple statements or letters for the same debt balance.
Once you have a good idea as to who you owe and how much debt you really have, you can explore your options for dealing with it. Our Financial Counselors can help you create an action plan to take care of your debt once and for all. Call LSS Financial Counseling at 1-888-577-2227 to schedule a free appointment or GET STARTED ONLINE now. Get a fresh financial perspective and a plan for moving forward this spring!
Author Mary Mckeague is a Certified Financial Counselor with LSS and she specializes in Budget and Debt Counseling.