How to Stop Living Paycheck to Paycheck
Disclaimer: The materials and content within this podcast are intended as general information only and are not to be considered a substitute for professional legal advice or a consultation with a lawyer.
1. Family Law Tip of the Week
As much as you want to get finished with your case quickly, DO NOT rush! When people rush, mistakes get made, they make decisions in haste and oftentimes, they are unhappy with the result. Your family law case is important. Give it the time to evolve that it deserves.
2. How to Stop Living Paycheck to Paycheck
Chandra Winford was the CFO for her ministry. She’s currently a professional financial analyst, a speaker, author of the book “Money Does Matter and So Does How You Handle It!” and the owner of Winford Financial, which is focused on webinars and workshops to help people get their finances in order. In this episode of The Family Law Insider, Chandra shares some practical strategies on handling money whether you are single or married.
In her prior position, one of the key things Chandra did was to assess the ministry’s finances. She entered into a lot of negotiations with the ministry’s vendors to make financial adjustments, then helped the ministry focus on the essentials. In a year’s time, Chandra was able to turn around her ministry’s financial situation around from disaster to success.
Multiple Streams Of Income
“Your buying power is shrinking and your income is not increasing.”
Chandra is realistic so people can understand the importance of her strategies. She enables her clients to assess their finances by asking questions like,
“How many people put the same amount of money in their gas tank today as they did a year ago?”
We live life thinking that we’ll always have a job and our income is going to be the same. We may feel comfortable when making decisions, but we don’t factor in the unexpected.
Chandra suggests people start preparing for the worse as if it’s about to happen in a month. People need to have the mindset not that “nothing’s going to happen,” but “when it’s going to happen.” She encourages people to have a reserve fund to help when those unexpected things do happen.
“Everybody has a different lifestyle.”
Chandra believes in customizing a budget based on a person’s lifestyle. She believes the reason why people think they cannot keep a certain budget is because it’s not realistic for them. If a person is the type who needs his/her hair done every two weeks, that expense has to be added into the budget. Chandra says you don’t want to mess up your budget by spending on things that aren’t in it. You have to feel good about your lifestyle, as long as it is within your income.
“God forbid that you get fired.”
Chandra encourages people planning to stay in a single career to identify hobbies that they like and skill sets that they have. These are additional source of income that can be used to sustain one’s self should there be a sudden loss of income.
It’s a mindset
“Part of that change is recognizing it.”
People have to identify developed habits that might need to change. Chandra managed her impulse buying by leaving the item (she thought she wanted) and coming back after 48 to 72 hours, finding that she had forgotten about the item 80% of the time.
There are programs out there that are underused because people don’t know about them or seek them out. Aside from unemployment, Chandra suggests people search for resources available in the area (like HomeSafe Georgia). When running out of financial reserve, Chandra says it goes back to the philosophy of prioritizing what is most important. Chandra does not advocate the use of credit cards because things might get out of control if a person isn’t careful.
“It’s about not feeling defeated but knowing that you can overcome.”
Financial loss is a struggle that could make a person feel embarrassed or ashamed. Chandra believes it helps to talk to somebody who has been through that situation. Seek counseling or find people who can encourage you through that time period.
We Have Not Because We Ask Not
As a married couple, pooling money together didn’t work for Chandra. Having separate accounts helps partners not feel restricted. A joint account to cover the household expenses, with two separate personal accounts worked better for Chandra and her husband. There should be discussion when it comes to investments, and Chandra suggests it might be best to have a 4th account for those. And, the person who is stronger in income should handle the household expenses.
“You and your spouse being in agreement is key.”
When you are in financial trouble, Chandra’s advice is to call the vendors involved (like phone companies, credit card companies, cable companies, etc.). In most cases, these companies do not want to lose their business, so they will find ways to lower a customer’s payments.
The Last Option
Taking an unsecured debt (like a credit card debt) and then securing it on a debt consolidation loan based on the equity of your house is risky, because you’re putting your house on the line. Chandra says a personal loan is fine, as long as it isn’t a home equity type of loan.
“I don’t like bankruptcy.”
Chandra believes filing for bankruptcy should only be a last option because people should do everything in their power to pay their debts back. Bankruptcy may be considered if a person has exhausted all options. We all make mistakes and in many cases, bankruptcy makes sense after a divorce.
“You have to choose what you’re gonna get and what you’re gonna leave.”
As soon as a child can understand the value of a dollar, parents should start teaching them how to spend money. Chandra started teaching her daughter the value of money at age 10 by giving he chores around the house, giving her an allowance, telling her about savings, and then having her make decisions over on spending it.
Chandra believes a child should be introduced to having a bank account at age 8-10 years old. When the child reaches high school, Chandra says they need to be taught about debit and credit cards. They need that understanding by college because so many credit cards will be available at that time.
Check Registers and Cash
Chandra feels that people should still use check registers. At least use the check register to document the physical checks written, who it was written to, and how much was paid. Many people do not realize how much money they are spending until they check their debit card register.
“Live within your means.”
Budget based upon when you get paid. It is important to sit down to assess your financial situation, prioritize what’s important, see where you can cut expenses so you can stay within your means, and try to live without credit cards. If you can’t do it on your own, seek out for a financial planner to help you.