ICFE eNEWS #10-19 - May 18th 2010

How To Remain Stable In An Unstable Economy

by Jim Garnett, a/k/a Ask Mr. G. and a member of the ICFE's Board of Educational Advisors

1. Know what you spend. Carry a small spiral notebook for a month and write down everything you buy with cash or debit cards. Other spending will show up in your checkbook register or credit card statement.
2. Spend less than you make. If you find that you spend more than you make, you will need to either make more or spend less. The option of using credit cards to make up the deficit is not a wise option.
3. Cut back realistically. To avoid failure and discouragement, reduce spending on extras by 50% rather than eliminating spending on extras all together.
4. Stop worrying about "the Jones'". Many of "the Jones'" who appear wealthy are buried up to their eyeballs in debt.
5. Cultivate a "this is not a forever thing" attitude. Lead your family in thinking "We are doing now what we need to do, so we can do later what we want to do.
6. Do not carry the entire burden alone. Allow your family members to work together with you to reach the other side of the problem. The old proverb is right, "A joy shared is double joy; a problem shared is half a problem."
7. Do not borrow to pay off debt. Borrowing to pay off debt is merely moving the debt to a different location. Digging a hole in your front yard in order to fill in the hole in your back yard has never been a good plan.
8. Pay off debt using a snowball effect. Continue to pay each debt at its current minimum payment amount. Put as much extra toward the smallest debt balance as you can. When that debt is paid off, add its payment to the payment of the next smallest balance.
9. Reduce your number of active credit cards to one or two. Debt spread out over 10 credit cards seems like less debt than the same amount of debt on one card!
10. Do not be a co-signer. Co-signing makes you 100% responsible for the debt and can easily be a fast track to damaging important relationships.
11. Sell stuff you can do without. Yard sales and Craig's List can bring in needed monies.
12. Don't go into debt simply for tax benefits. To pay $5000 interest on debt in order to have a $1250 tax deduction does not make sense. You will get the same deduction if you give your church or nonprofit a $1250 contribution.
13. Don't use your home's equity like an ATM machine. Pay off your home loan early instead of continually borrowing against it.
14. Fund your emergency savings account each paycheck. Emergencies happen, and it is better to have money set aside for them than to go into debt.
15. Be content with what you have. Try to imagine how happy you would be if you lost everything you have and had it all returned to you the next day!

Sent by:

Paul Richard
President - Executive Director
Institute of Consumer Financial Education (ICFE)

ICFE - Institute of Consumer Financial Education - ICFE.info - info@ICFE.info - 619.239.1401