After the holiday celebrations, many people end up with more debt than they would like. January is a good time to think about ways to manage debt and make resolutions to achieve financial stability.
• Develop a budget. The first step toward taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your fixed expenses — those that are the same each month — such as mortgage payments or rent, car payments and insurance premiums. Next, list the expenses that vary — such as entertainment, recreation and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance and education.
• Assess your debt. After you’ve established your budget, you’ll be prepared to start paying down your existing debt. When reducing your debt, always continue to make your payments on time. Try to pay more than the minimum due. Generally, it is a good idea to pay off debt with highest interest rates first.
• Contact your creditors. Contact your creditors immediately if you’re having trouble making ends meet. Tell them why it’s difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don’t wait until your accounts have been turned over to a debt collector. At that point, your creditors have given up on you.
• Find free fun. Use the month of January to get your budget back on track. Plan to only spend money on necessities, and then commit to finding opportunities for free family fun. Plan a family game night or check out books and movies from your local library. Your family might also enjoy preparing dinner together or volunteering for a local charity. If you enjoy outdoor fun, winter provides plenty of opportunities for sledding or building a snowman. Use your imagination, and the savings will add up.
• Open a holiday savings account. Saving a little money each month will help you avoid facing the same spending crunch in December 2013. You’ll hardly notice automatically transferring a little money each week or month into a separate account set aside for holiday spending, but it can help a lot for the holiday season next year.
Information provided by Tim Esbeck, community president, Manufacturer’s Bank & Trust Clear Lake Branch, 1919 Hwy. 18 East, Clear Lake. For more information, call 641-357- 6161.