How to Work Through Financial Problems

Posted by Anonymous , 9/4/2007 Tags:FinancialProblems
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How to Work Through Financial Problems

Introduction

We all have financial problems at some time or another. The trick is to know how to work through them to get back on track. Stop and take control of your finances. Look at the helpful and not-so-helpful resources that pop up. You will need to decide if each is a worthwhile option. If you have enough resources to pay the monthly expenses and have some left over, the steps below will help you accomplish your goal.

Instructions

Difficulty: Moderate

Identify the Problems

Things You'll Need

  • Calculator
  • List of expenses

Steps

1

Step One

Recognize the signs that you are in financial trouble. Are you living paycheck to paycheck, but only because you have 12 credit cards to get you by? This is a sign that you are overextended credit wise.
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Step Two

Identify the causes of your financial problems. This is an essential step. What has caused the problems in your finances? Keep a list of the problems you see. Is it because you missed a few paychecks or had to take a job making half what you did before? Once you identify your problems, you should be on track to finding solutions.
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Step Three

Prioritize the problems you have on your list. Give the answers to the questions and work on them one at a time. If you need help, enlist someone who will not judge but help you to make tough choices.

Achieve a Solution

Steps

1

Step One

Write down all of the normal expenses you foresee in the next year. Use a calendar or spreadsheet that lists the dates of paychecks and any unusual money (IRS refunds, etc.) that could come in.
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Step Two

Sort the expenses by list of importance, remembering that you need shelter, food, and gas or toll expenses to get back and forth to work first. This will work easier on a spreadsheet. If you are not using a computer, you may need to rewrite your calendar list on plain paper.
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Step Three

Remember that after food, housing and work expenses, it gets a little trickier. You still need to allow some amount for pocket money. How about clothing upkeep? It would also be very helpful to put aside a rainy day amount in case you need to take care of something larger such as unexpected automobile repair. You don't need to set aside an extravagant amount for these things as this would defeat the purpose of this financial exercise, and you would continue to have problems.
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Step Four

Pay the most important expenses first. The leftover amount is what you will work with.
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Step Five

Sort your list of expenses again. Remove anything that relates to food, housing, and work expenses. Those that are left should be sorted by the amount owed (total, not monthly).
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Step Six

Pay the usual amount on these bills, and then see what you have left. If you have paid everything and have money left over, use it to pay on the bill that you owe the least on. As an example, you pay the least monthly payment on your doctor bill. Adding this leftover amount to that ordinary payment will reduce the total amount owed. Doing this a few months will pay off this bill and ahead of time you can start the same thing on another bill.
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Step Seven

Look at your situation truthfully. If you do not have enough income to cover everything, you need to seek professional financial counseling.

Tips & Warnings

  • If you are in debt pretty deep, contact the local Consumer Credit Counseling service. They have a free service that will help you to pay off credit accounts that have gotten out of control. They speak directly with the creditors and can even stop the interest accrual while lowering your payments.
  • Don't trust any credit repair service that you have to pay. There are free services out there that actually work for you instead of themselves.
  • If you are not strong enough to get out of debt by yourself, find someone who will help you.
  • Don't depend on credit to get you straight. It rarely works out.
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