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Financial tips for families in the current economy

  • Published
  • By Gloria Basa
  • 87th Force Support Squadron
McGUIRE AIR FORCE BASE, N.J. --  Like many families all over the U.S., some military families are currently experiencing financial strain due to the ailing economy. As a fellowship recipient of the Financial Industry Regulatory Authority Investor Education Foundation scholarship, along with certification provided by the Association for Financial Counseling and Planning Education, I would like to share some of the information that I acquired from the training, webinars and courses provided to me through the fellowship. I've also worked as a pre-bankruptcy counselor for a non-profit organization in Texas, which has provided me some experience in the financial counseling field. 

Below are some suggestions that might help in this current financial situation: 

· Be a saver and not a spender. Build an emergency/savings fund to reduce the damages to your wallet in case an unexpected emergency occurs such as your car breaking down or to replace a washer/dryer. Subtract your total monthly expenses from your take-home income to find your discretionary or disposable income. Your discretionary income is extra income you can spend on essential or non-essential items, or save it and add to an emergency/savings fund ($50 each payday/every two weeks will accumulate to $6,000 in five years, plus interest). Contact your bank to open a savings account and to have a certain amount of your paycheck automatically deposited into it. 

· Research and compare before buying. Avoid impulse buying especially on big ticket items such as a car, refrigerator or washer/dryer. Online shopping or online price comparison is the most convenient and smart way to do research. Be aware that not all items on sale are a good deal; some sales are just exaggerated advertisement to entice you to purchase the item. 

· Budgeting and effective cash-flow management is the key to a solid financial position. A budget is an estimation of your income and expenses; it is a written account of your financial profile to ensure that your expenses do not exceed your income. Living on a budget does not mean deprivation or living a boring life, it is merely a tool to keep account of your spending. It helps identify your financial condition and institute appropriate changes to achieve your financial goals. Write down all expense to track your monthly spending and categorize them either as fixed, variable, essential or non-essential. After a few weeks, you'll be able to determine your disbursements and perhaps determine which expenses to reduce or eliminate. 

· Pay off credit cards and keep it off. Credit overload is a major obstacle to a person's financial advancement. Your budget worksheet must include large amounts toward paying off your credit card debts and increasing your savings or cash reserve. Missing payments and late payments adversely affects your credit report. The Fair Credit Reporting Act guarantees you access to a free credit report for each of the three nationwide reporting agencies - Experian, Equifax, and TransUnion -- every 12 months. The information in your credit report is used to evaluate your applications for credit, insurance, employment and to obtain housing. You must ensure the information in the report is accurate and up-to-date. 

· Note: Filing bankruptcy is not your only option. Before considering bankruptcy, discuss your situation with a financial counselor. There are military organizations that provide debt management and credit counseling free of charge.