You have been working hard to complete your education and training and now you have reached your goal…and your career has begun. Finally…success! For some of us, this means that now it’s time for all of those things you have been holding off on: the house, the car, the family, etc. Taking on too much too quickly can easily throw your life off balance. Finances are the number one cause of stress which will have a negative effect on your career, your relationships, and your health. With a little thinking and planning you can keep these exciting new adventures from crippling your success.
Can I afford a car payment?
Let’s take buying a car for example. When you budget for your car payment you know about how much you can spend on a vehicle and then you do your research – maybe a little haggling over the price – and you have the car of your dreams.
However, if you don’t plan for the additional costs of owning a car you might find yourself unintentionally going over budget.
Make sure you factor in auto insurance, annual registration (tabs), gas, parking, regular maintenance, and the unexpected repair. If you are in over your head with a car now, get out. Sell the car, trade it in for a car you CAN afford, or talk with your bank or credit union about restructuring the loan to make the payments affordable. Bottom line, you will enjoy a vehicle that you can afford a lot more than one that you cannot.
Home sweet home
Buying a home will likely be the most exciting and most expensive purchase you will make in your life and the costs don’t stop after you sign the mortgage papers. You have property taxes, homeowner’s insurance, utilities, and maintenance costs.
So, how do you know if you are prepared for homeownership? Practice! Look at your budget, decide what you think a comfortable mortgage payment would be (including a generous estimate of property taxes and homeowners insurance for your area) and start making the payment. Take your estimated mortgage payment, subtract your current housing costs and start saving the difference. After 6 to 12 months you now have a good idea how that payment would feel and created some savings. It’s a win-win.
The little things add up
It isn’t just the big ticket items that can put us over the financial edge. It can just as easily be the little things like eating out, clothes, entertainment, cell phones, cable, etc. $25 here, $75 there can add up to more than $1000/month before you know it. The good news is that there is an easy fix: create a monthly cash flow plan that will allow you a comfortable amount of spending on these extras. And the key is sticking to it; that way you can have your fun while building savings and avoid unnecessary debt.
Signs that trouble is brewing in your personal finances
- You are putting necessities on your credit card
- You are putting money into savings only to take it back out again at the end of the month
- You are putting off payments until the last minute
- You have less than $500 in savings
- You are close to maxing out one or more credit cards
If even one of the above signs rings true for you, take action now so you can avoid even bigger financial problems and stress. Call LSS at 888.577.2227 to schedule an appointment with one of our Financial Counselors. We’re here to help you Conquer Your Debt, build savings, and achieve your financial goals.
You can even get started with a click of a button. It’s that simple!
Author Ashley Hagelin is a Certified Financial Counselor with LSS Financial Counseling and she specializes in Reverse Mortgage Counseling.